Ritter Corporation’s accountants prepared the following financial statements for year-end 20X2. RITTER CORPORATION Income Statement 20X2 Revenue $400 Expenses 250 Depreciation 50 EBIT $100 Dividends $50 Taxes $20 RITTER CORPORATION Balance Sheet December 31 20X1 20X2 Assets
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
- Ritter Corporation’s accountants prepared the following financial statements for year-end 20X2.
RITTER CORPORATION
Income Statement
20X2
|
Revenue |
$400 |
|
Expenses |
250 |
|
|
50 |
|
EBIT |
$100 |
|
Dividends |
$50 |
|
Taxes |
$20 |
RITTER CORPORATION
December 31
|
|
20X1 |
20X2 |
|
Assets |
|
|
|
Cash |
$5 |
$25 |
|
Other current assets |
95 |
125 |
|
Gross fixed assets |
100 |
200 |
|
Total assets |
$200 |
$350 |
|
Liabilities and Equity |
|
|
|
Current liabilities |
$50 |
$75 |
|
Long-term debt |
0 |
75 |
|
|
150 |
200 |
|
Total liabilities and equity |
$200 |
$350 |
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