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Examveda

Net income available to stockholders is Rs 150 and total assets are Rs 2,100 then return on total assets would be

A. 0.07%

B. 7.14%

C. 0.05 times

D. 7.15 times

Answer: Option B

Solution(By Examveda Team)


Net income available to stockholders = 150
Total assets = 2100
Return on common equity rate shows the net income earned per every rupee invested.It acts as a yardstick of profitability.
Return on common equity
= (net income - preferential stock)/Average common stock holder's equity
No further information is available
= (150/2100)×100
= 7.14%

This Question Belongs to Commerce >> Financial Management

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