91Ó°ÊÓ

$\begin{array}{rcl}\mathrm{Net}\mathrm{income}\mathrm{to}\mathrm{stockholder}\text{'}\mathrm{s}\mathrm{equity}\mathrm{ratio}& =& \frac{\mathrm{Net}\mathrm{income}}{\mathrm{Stockholder}\text{'}\mathrm{s}\mathrm{equity}}\\ & =& \frac{\$155,000}{\$761,000}\\ & =& 20.37\%\end{array}$

The net income to stockholder’s equity of the company for the year 20X1 is 20.37%

$\begin{array}{rcl}\mathrm{Net}\mathrm{income}\mathrm{to}\mathrm{stockholder}\text{'}\mathrm{s}\mathrm{equity}\mathrm{ratio}& =& \frac{\mathrm{Net}\mathrm{income}}{\mathrm{Stockholder}\text{'}\mathrm{s}\mathrm{equity}}\\ & =& \frac{\$191,000}{\$966,000}\\ & =& 19.77\%\end{array}$

The net income to stockholder’s equity of the company for the year 20X2 is 19.77%

$\begin{array}{rcl}\mathrm{Net}\mathrm{income}\mathrm{to}\mathrm{stockholder}\text{'}\mathrm{s}\mathrm{equity}\mathrm{ratio}& =& \frac{\mathrm{Net}\mathrm{income}}{\mathrm{Stockholder}\text{'}\mathrm{s}\mathrm{equity}}\\ & =& \frac{\$208,000}{\$1,770,000}\\ & =& 11.75\%\end{array}$

The net income to stockholder’s equity of the company for the year 20X3 is 11.75%

$\begin{array}{rcl}\mathrm{Net}\mathrm{income}\mathrm{to}\mathrm{stockholder}\text{'}\mathrm{s}\mathrm{equity}\mathrm{ratio}& =& \frac{\mathrm{Net}\mathrm{income}}{\mathrm{Stockholder}\text{'}\mathrm{s}\mathrm{ratio}}\\ & =& \frac{\$192,000}{\$2,220,000}\\ & =& 8.65\%\end{array}$

The net income to stockholder’s equity of the company for the year 20X4 is 8.65%. In addition, there is downward movement in return on equity over the four year period, becaue the stockholder’s equity is rapidly increasing in comparison to the net income of the company.