Question

Based on the following information, determine the Return on Equity. Provide your answer in decimal form with three significant digits.

INCOME STATEMENT			BALANCE SHEET
Revenue	$38,877,756.76		Assets
			Current Assets
Direct Costs			Cash & Securities	$2,151,266.15
Materials	$5,323,315.69		Accounts Receivables	$4,445,237.68
Labor	$4,384,218.03		Retainage	$920,988.32
Subcontractors	$16,651,954.24		Inventory	$85,012.02
Equipment	$2,399,707.16		Earnings in Excess of Billings	$277,109.63
Other	$3,083,293.13		Prepaid Expenses	$818,048.1
			Other Current Assets	$214,574.04
Overhead
Indirect Costs	$833,274.68		Fixed Assets
G&A Costs	$3,665,166.4		Property	$247,360.68
			Construction Equipment	$3,430,387.61
Profits			Vehicles	$507,864.35
			Office Equipment	$65,353.23
			Less Depreciation	$-3,109,492.7
			Other Fixed Assets	$227,414.92
			Liabilities
			Current Liabilities
			Accounts Payables	$2,120,967.91
			Retainage (Subcontractors)	$68,965.96
			Billings in Excess of Earnings	$726,054.48
			Income Tax Payables	$72,832.93
			Other Current Liabilities	$68,727.19
			Fixed Liabilities
			Mortgages	$607,216.94
			Equipment / Vehicle Financing	$992,595.29
			Other Fixed Liabilities	$205,885.31
			Owners Equity

Answer 1

Return on equity = Net Income / Owners equity = 2536827.43 / 5417878.02 = 46.823%

Workings:

Cash & Securities	2151266.15
Accounts Receivables	4445237.68
Retainage	920988.32
Inventory	85012.02
Earnings in Excess of Billings	277109.63
Prepaid Expenses	818048.10
Other Current Assets	214574.04
Total current assets	8912235.94
Property	247360.68
Construction Equipment	3430387.61
Vehicles	507864.35
Office Equipment	65353.23
Less: Depreciation	-3109492.70
Other Fixed Assets	227414.92
Total fixed assets	1368888.09
Total assets	10281124.03
Accounts Payables	2120967.91
Retainage (Subcontractors)	68965.96
Billings in Excess of Earnings	726054.48
Income Tax Payables	72832.93
Other Current Liabilities	68727.19
Total current liabilities	3057548.47
Mortgages	607216.94
Equipment / Vehicle Financing	992595.29
Other Fixed Liabilities	205885.31
Total long term liabilities	1805697.54
Total Liabilities	4863246.01
Owners equity (Total assets - Total liabilities)	5417878.02

Revenue	38877756.76
Less: Direct Costs
Materials	5323315.69
Labor	4384218.03
Subcontractors	16651954.24
Equipment	2399707.16
Other	3083293.13
Overhead
Indirect Costs	833274.68
G&A Costs	3665166.40
Net Income	2536827.43