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sir i am studying bpp text book for F2 the is topin ROE return on equity calculation is Net profit divided by average equity . My question is that in exam question average is given in the question or we are expected to be calculate average equity. if we are expected to calculate average equity so how we can calculate their is no discussion in book about average equity.thanks
It is very unlikely that return on equity will be asked in Paper MA.
If it is asked then usually we are only given year end equity and so there would be no choice but to use that. If you were given equity at the start and end of the year, then you would use the average (add the two together and divide by 2) but it would be extraordinary if that were needed in the exam.
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