What is Katz's Return on Equity (ROE)?

What is their return on equity (ROE)?

Final answer: The Return on Equity (ROE) for Katz is calculated by dividing the net income by shareholder's equity, resulting in approximately 12.19%.

Explanation:

The subject of this question involves computation of a financial metric called Return on Equity (ROE). ROE is calculated by dividing net income by shareholder's equity. Shareholder's equity is computed by subtracting total liabilities from total assets. In this case, Katz's shareholder's equity will be $784,325 (total assets) minus $387,775 (total liabilities) which equals $396,550. Now, we will divide the net income of $48,325 by the shareholder's equity of $396,550. The result in decimal form will be approximately 0.1219 which, when converted to percentage form, equals 12.19%. Therefore, Katz's Return on Equity (ROE) is 12.19% which corresponds to Option B).
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