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Excerpts from TPX Company's December 31, 2018 and 2017, financial statements are presented below: 2018 2017 Accounts receivable $83,000 $79,000 Inventory 85,000 74,000 Net sales 480,000 373,000 Cost of goods sold 255,000 226,000 Total assets 840,000 770,000 Total stockholders' equity 495,000 445,000 Net income 79,000 52,000 TPX Company's 2018 return on equity is:

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Answer:

Return on equity in 2018 = Net income/Total stockholders equity x 100

                                         = $79,000/$495,000 x 100

                                         = 15.96%

Explanation: Return on equity is the relationship between net income and total stock holders equity. In this question net income for 2018  was $79,000 and total stockholders equity in 2018 was $495,000. The ratio of net income to total stockholders equity gives return on equity.

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