Shareholders equity refers to the residual interest of the shareholders in the

Shareholders equity refers to the residual interest

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Shareholder’s equity refers to the residual interest of the shareholders in the assets of the corporation, after deducting liabilities. Return on shareholders’ equity (ROE) shows how many dollars of net income were earned for every dollar invested by the owners. ROE is calculated as follows: Net Income ÷ Average Shareholders’ Equity. To find the ROE for Peyton Approved we will take the net income of $12,505,417.87 derived from the income statement and divide it by the total equity of $11,688,540.46 derived by the balance sheet: 12,505,417.87 ÷ 11,688,540.46 = 1.069, which tells us that the company has earned 107% on every dollar invested by the shareholders. This is good news for shareholders since the company has added two additional storefront location and launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next month.
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Retained earnings per share refers to the portion of net income retained by the company rather than distributed to its owners as dividends. Peyton Approved expects its expansion will
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