Had anyone found the answer to my question? Repost:
Can someone help me out with this? Is this Ninja sim incorrect? By definition, average equity is beginning equity plus ending equity divided by 2. I did that and Ninja marked me incorrect because they they took net income divided by ending equity for year 2, but in their explanation they include the definition below and then did the calc a complete different way. What am I missing?
“Return on equity = Net income less preferred dividends ÷ Average common stockholders' equity
No preferred dividends were paid.
Net income for Year 1 = $24,400,000
Stockholders' equity for Year 1 = $86,500,000
$24,400,000 ÷ $86,500,000 = 28.21% for Year 1
Net income for Year 2 = $13,815,000
Stockholders' equity for Year 2 = $100,315,000
$13,815,000 ÷ $100,315,000 = 13.77% for Year 2″
It's SIM #55 by the way.
FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.