To compute the return on stockholders' equity (ROE) for both Cable Corporation and Multi-Media Incorporated, we use the formula:
[tex]\[ \text{ROE} = \left( \frac{\text{Net Income}}{\text{Stockholders' Equity}} \right) \times 100 \][/tex]
### Step-by-Step Solution:
1. Identify the given data:
- For Cable Corporation:
- Net income = [tex]$38,200
- Stockholders' equity = $[/tex]319,000
- For Multi-Media Incorporated:
- Net income = [tex]$172,000
- Stockholders' equity = $[/tex]483,000
2. Compute the ROE for Cable Corporation:
[tex]\[
\text{ROE}_{\text{Cable}} = \left( \frac{38,200}{319,000} \right) \times 100
\][/tex]
The computation gives us approximately:
[tex]\[
\text{ROE}_{\text{Cable}} = 11.97\%
\][/tex]
3. Compute the ROE for Multi-Media Incorporated:
[tex]\[
\text{ROE}_{\text{Multi-Media}} = \left( \frac{172,000}{483,000} \right) \times 100
\][/tex]
The computation gives us approximately:
[tex]\[
\text{ROE}_{\text{Multi-Media}} = 35.61\%
\][/tex]
### Results:
- Cable Corporation:
[tex]\[
\text{ROE} = 11.97\%
\][/tex]
- Multi-Media Incorporated:
[tex]\[
\text{ROE} = 35.61\%
\][/tex]
The return on stockholders' equity for Cable Corporation is [tex]\( 11.97\% \)[/tex] and for Multi-Media Incorporated is [tex]\( 35.61\% \)[/tex].
