Just missed a question in CFA on-line for the following:
They give 2013 P/L and 2013-2012 B/S. They ask for 2013 ROE.
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Which Equity should we take? To me it seems reasonable to take beginning value of Equity, which would be ending year 2012 in this case. The answer takes 2013 Equity which I don’t fully understand.
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Which concepts do you consider? The lines given are:
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Common stock 100
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Retained Earnings 20
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Notes Payable 30
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Long term debt 60
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Total liabilities and equity 150
I chose to take total liabilities and equity, and basically subtract liabilities, which gives a figure that does not match with Common stock + RE. They took these two though…
Thanks for any help.