The Return on Equity for a Company That Has Sales

question 52

True/False

The return on equity for a company that has sales of $50,000, net income of $25,000 and average Stockholders' Equity of $125,000 is 20%.

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Definitions:

Deferred Tax

A tax obligation or asset that results from temporary differences due to the different timing of recognition of income and expenses for tax and accounting purposes.

Tax Rate

The fraction of earnings that the government requires from an individual or business as tax.

Operating Segment

It's a component of a business that engages in business activities from which it may earn revenues and incur expenses, and for which separate financial information is available.

Canadian GAAP

Generally Accepted Accounting Principles in Canada, comprising standards for financial reporting and accounting practices in Canadian entities.