Z Corporation's beginning of the year equity for 2016 was $2,300,000 and end of year equity was $2,570,000. The net income for the year was $450,000. What is the Return on Equity for 2016 for Z Corporation rounded to the nearest tenth percent?

To calculate the Return on Equity (ROE) for Z Corporation for 2016, you can use the following formula:

\[
\text{ROE} = \left(\frac{\text{Net Income}}{\text{Average Equity}}\right) \times 100
\]

Where:
- **Net Income** = $450,000
- **Average Equity** = $\frac{\text{Beginning Equity} + \text{Ending Equity}}{2}$

First, calculate the Average Equity:

\[
\text{Average Equity} = \frac{2,300,000 + 2,570,000}{2} = \frac{4,870,000}{2} = 2,435,000
\]

Next, calculate the ROE:

\[
\text{ROE} = \left(\frac{450,000}{2,435,000}\right) \times 100 \approx 18.5\%
\]

So, the Return on Equity (ROE) for Z Corporation in 2016 is approximately **18.5%**.

Would you like any details or further explanation?

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**Here are some related questions to deepen your understanding:**

1. How would changes in net income affect the ROE?
2. What other financial ratios are important to analyze alongside ROE?
3. How would the inclusion of dividends affect the ROE calculation?
4. What are the limitations of using ROE as a sole measure of financial performance?
5. How does the ROE of Z Corporation compare to industry averages?

**Tip:** ROE is a key metric for assessing how efficiently a company is using shareholders' equity to generate profit.

Learn how to calculate the Return on Equity (ROE) for Z Corporation in 2016. Step-by-step solution using the ROE formula with specific financial Beginning equity $2,300,000, Ending equity $2,570,000, and Net income $450,000.

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