Academy Driving School reported the following amounts in its financial statements:

Calculate EPS and ROE for Year 2. Another driving school in the same city reported a higher net income ($ 45,000), yet its EPS and ROE ratios were lower than those for the Academy Driving School. Explain how this apparent inconsistency could occur.

Transcribed Image Text:

Y 1 Year 2 ear Number of common shares Net income Cash dividends paid on common stock Total stockholders equity 11,500 11,500 23.000 3,000 $240,000 S 18,000 3,000 $220,000