What Is the Rate of Return on Shareholders' Equity for the Year

question 45

Short Answer

What is the rate of return on shareholders' equity for the year ending 2012 if sales were $200,000, net income was $75,000, total shareholders' equity was $750,000, and total shareholders' equity for 2011 was $675,000 (round to one decimal place)?

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Definitions:

Indirect Method

A accounting technique used to prepare the cash flow statement, converting net income into net cash flow from operating activities by adjusting for non-cash items and changes in working capital.

Net Income

Total earnings of a company after all expenses and taxes have been deducted from total revenue.

Note Receivable

A financial asset representing a written promise for a debtor to pay a specified sum of money to the creditor on a demand or at a future date.

Financing Activities

Activities that result in changes in the size and composition of the equity capital or borrowings of the entity, reflected in its cash flows.