The Net Profit of a Company for the Year Ended

question 60

Multiple Choice

The net profit of a company for the year ended was $550,000.The company has no preference shares.Ordinary shareholders' equity was $1,600,000 at the beginning of the year and $2,600,000 at the end of the year.Calculate the return on ordinary shareholders' equity.

• A)21.15%
• B)34.38%
• C)17.46%
• D)26.19%

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Definitions:

Debts

Money that is owed or due to be paid to another individual or entity.

Sole Proprietorship

Business ownership in which there is no legal distinction between the sole proprietor’s status as an individual and his or her status as a business owner.

Partnership

A legal business structure where two or more individuals agree to share the profits and losses of a business.

Corporation

Legal organization with assets and liabilities separate from those of its owner(s).