Use the Table for the Question(s) Below

question 48

Multiple Choice

Use the table for the question(s) below.
Consider the following income statement and other information:

-Luther's return on equity (ROE) for the year ending December 31,2006 is closest to:

• A) 2.0%
• B) 6.5%
• C) 8.4%
• D) 12.7%

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Common Shares

Equity securities that represent ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Preferred Shares

A class of stock that provides shareholders with a priority claim on assets and earnings before common stockholders, usually including fixed dividend payments.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.