To calculate the Return on Equity (ROE) for the current year, we need to use the formula:

$\text{ROE} = \frac{\text{Net Income}}{\text{Average Shareholder's Equity}}$

Step 1: Calculate Net Income

Net Income can be calculated using the formula:

$\text{Net Income} = \text{Sales} - \text{COGS} - \text{Operating Expenses} - \text{Depreciation Expense} - \text{Interest Expense} - \text{Taxes}$

Let's calculate it using the provided dataTo calculate the Return on Equity (ROE) for the current year, we need to use the formula:

$\text{ROE} = \frac{\text{Net Income}}{\text{Average Shareholder's Equity}}$

Step 1: Calculate Net Income

Net Income can be calculated using the formula:

$\text{Net Income} = \text{Sales} - \text{COGS} - \text{Operating Expenses} - \text{Depreciation Expense} - \text{Interest Expense} - \text{Taxes}$

Let's calculate it using the provided

• Sales: 336,987
• COGS: 173,182
• Operating Expenses (excluding depreciation): 61,196
• Depreciation Expense: 23,172
• Interest Expense: 16,035
• Taxes: 18,795

$\text{Net Income} = 336,987 - 173,182 - 61,196 - 23,172 - 16,035 - 18,795$

$\text{Net Income} = 44,607$

Step 2: Calculate Average Shareholder's Equity

Shareholder's Equity is calculated as the sum of Common Stock, Additional Paid-in Capital, and Retained Earnings.

$\text{Shareholder's Equity} = \text{Common Stock} + \text{Additional Paid-in Capital} + \text{Retained Earnings}$

For the current year:

$\text{Current Year Shareholder's Equity} = 42,000 + 216,660 + 136,800 = 395,460$

For the prior year:

$\text{Prior Year Shareholder's Equity} = 37,600 + 200,000 + 122,400 = 360,000$

The average shareholder's equity is calculated as:

$\text{Average Shareholder's Equity} = \frac{360,000 + 395,460}{2} = 377,730$

Step 3: Calculate ROE

$\text{ROE} = \frac{44,607}{377,730} \approx 0.118$

Final Result

The Return on Equity (ROE) for the current year is approximately 11.8%.

Do you have any questions or need further details? Here are some related questions:

1. How does ROE help in evaluating a company's performance?
2. What impact do retained earnings have on shareholder's equity?
3. How would an increase in debt affect the ROE?
4. What is the significance of net income in financial analysis?
5. How can depreciation expenses influence net income and ROE?

Tip: A higher ROE generally indicates more efficient use of equity to generate profits.