A Company Has $510 000 in Average Ordinary Shareholders' Equity,Profit

question 73

Multiple Choice

A company has $510 000 in Average ordinary shareholders' equity,Profit of $312 000,and Preferred dividends paid of $15 000.What is the rate of return on ordinary shareholders' equity?

• A)61.2%
• B)62.0%
• C)58.2%
• D)59.3%

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Definitions:

Double Declining-Balance Depreciation

A method of accelerated depreciation which doubles the rate at which an asset’s book value depreciates compared to straight-line depreciation.

Annual Depreciation Expense

The portion of the cost of a fixed asset that is charged as an expense in a particular fiscal year, as a result of wear, tear, and obsolescence.

Straight-Line Depreciation

A method of calculating the depreciation of an asset by evenly spreading its cost over the expected life of the asset.

Asset Impairment Loss

A sudden write-down or devaluation of an asset to its fair market value which is lower than its currently recorded cost, reflecting unexpected decreases in value.