Question

Moore Corporation has earned $205,500 after tax. The return on equity for Moore Corporation is 18%. What's Moore's stockholders' equity?

Answer 1

ROE = Net income/Stockholders' equity, Stockholders' equity = Net income/ROE.
If Moore Corporation has earned $205,500 after tax and ROE = 18%, then Moore's stockholders' equity = $205,500/0.18 = $1,141,666.67.