Solution-Question - Computing Return on Equity

Question - Computing Return on Equity

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Question - Computing Return on Equity

Starbucks reports net income for 2018 of $4,518.3 million. Its stockholders' equity is $5,450.1 million and $1,169.5 million for 2017 and 2018, respectively.

a. Compute its return on equity for 2018.

b. Starbucks repurchased over $7,208.7 million of its common stock in 2018. Did this repurchase increase or decrease Starbucks' ROE?

ROE usually decreases since the repurchase of shares reduces the denominator (avg. stockholders' equity).

ROE usually increases since the repurchase of shares reduces the denominator (avg. stockholders' equity).

ROE usually increases since the repurchase of shares increases the denominator (avg. stockholders' equity).

ROE usually decreases since the repurchase of shares increases the denominator (avg. stockholders' equity).

c. If Starbucks had not repurchased common stock in 2018, what would ROE have been?

Reference no: EM132657928

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Question - Computing Return on Equity

Reference no: EM132657928

Reference no: EM132657928

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