Why in problem 3.18 b, I am not subtracting the dividends from the net income? The ROE formula in step 3 clearly states to do that, but in step 4, it is not deducted. I've included 2 snapshots for clarity 
N O 1 82% 15:59 4G Accounting: What The Numbers Mean 11th Editi... chegg.com 1 Bookmark Show all steps: Chapter 3, Problem 18P Problem Calculate profita bility and liquidity measures Presented here are the comparativ balance sheets of Hames, Inc., at December 31, 2017 and 2016. Sales for the yea ended December 31, 2017, totaled $1,700,000 HAMES, INC. Balance Sheets December 31, 2017 and 2016 2017 2016 Assets $63,000 Cash 57,000 Accounts recelvable 285,000 266,000 Merchandise inventory 261,000 247,000 Total current assets $609,000 $570,000 Land 82,000 109,000 Plant and equipment 375,000 330,000 Less: Accumulated depreciation (195,000) (180,000) $802,000 Total assets $898,000 Liabilities $ 54,000 $51,000 Short-term debt Accounts payable 168,000 144,000 Other accrued liabilities 68,000 54,000 $249,000 Total current liabilities $290,000 Long-term debt Total iabilities 56,000 105,000 $346,000 $354,000 Stockholders Equity Common stock, no par, 200,000 shares authorlzed, 80,000 and 50,000 shares issued, respectively Retained earnings: $224,000 $162,000 $286,000 $217,000 Beginning balance Net income for the year 102,000 84,000 Dividends for the year (60,000) (15,000 Ending balance $328,000 $286,000 Total stockholders' equity $448,000 $552,000 Total labilities and stockholders' equity $898,000 $802,000 Required: a. Calculate ROI for 2017. Round your percentage answer to two decimal places. b. Calculate ROE for 2017. Round your percentage answer to one decimal place. c. Calculate working capital at December 31, 2017. d. Calculate the current ratio at December 31, 2017. Round your answer to two decimal places e. Calculate the acid-test ratio at December 31, 2017. Round your answer to two decimal places. f. Assume that on December 31, 2017, the treasurer of Hames, Inc., decided to p $50,000 of accounts payable. Explain what impact, if any, this payment will have on the answers you calculated for parts a-d (increase, decrease, or no effect). g.Assume that instead of paying $50,000 of accounts payable on December 31, 2017 Hames Inc collectad 50.000 of accounte receivable Exnlain what imnac N 4 82% 15:59 Comment Step 3 of 14 A (b) Return on indicates the relationship between average common equity and net income available to the common stockholders. Return on equity calculated by using following formula: Net income Preferred dividends Return on equity= Average common stockholders' euqity Comment Step 4 of 14A The ROE or return on equity is the rate of return on the stockholders' equity. The ROE is calculated using the given data for net income and average stockholders' equity and the following formula: Net income Return on equity Average stockholders' equity $102,000 ($448,000$552, 000) / 2 20.4% Comments (1) Anonymous I dont understand. why is step 3 ROE formula is different that this one? Why am i not deducting the preferred dividends from the net income? Submit Step 5 of 14 A Hence, the return on equity is 20.4% Comment
