Calculate the return on ordinary shareholders equity

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Question - Pansies Pty Ltd is a small proprietary company. Its owners invested $3 capital in the company and it has grown considerably since. The following section is taken from Pansies Pty Ltd's statement of financial position at 30 June 2019.

Share capital (two shares) $3

Reserves 5,000

Retained earnings 10,000

Additional information:

-Pansies Pty Ltd's profit for the year ended 30 June 2019 was $8000.

-Cash dividends declared for the year ended 30 June 2019 were $5000.

-The directors of the company approved a transfer of $5000 to reserves. This was recorded in the ledger and is the only item affecting general reserves during the year.

Required - Calculate the return on ordinary shareholders' equity.

Reference no: EM132943645

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