Presented below is information from Solo Inc.'s financial statements: (In millions) Year 2 Year 1 Balance...
Presented below is information from Solo Inc.'s financial statements:
|
(In millions) |
Year 2 |
Year 1 |
|
|
Balance sheet |
|||
|
Total assets |
$34,310 |
$32,754 |
|
|
Shareholders' equity |
6,304 |
7,878 |
|
|
Income statement |
|||
|
Net sales |
$35,372 |
$35,034 |
|
|
Net income |
4,330 |
3,930 |
|
During Year 2, the company paid preferred dividends totaling $1,440 million. How much is the rate of return Solo generated for its common shareholders during Year 2?
a.68.7%
b.45.8%
c.6.7%
d.12.2%
Homework Answers
Rate of return for common shareholders Year 2 = ( Net income - Preferred dividends)/ shareholders equity
= (4,330-1,440)/6,304
= 45.8%
Correct option is b.
Kindly comment if you need further assistance. Thanks
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