If a company's net income is $16 million and its owner's equity is $10 million, what is its return on equity?

To calculate return on equity (ROE), you use the formula:

ROE = (Net Income / Owner's Equity) × 100%

In this case, the net income is $16 million, and the owner's equity is $10 million. Plugging these values into the formula gives:

ROE = (16 million / 10 million) × 100%

ROE = (1.6) × 100%

ROE = 160%

This means that for every dollar of owner's equity, the company generates $1.60 in profit, which equates to a return of 160%. High ROE values indicate efficient use of equity capital to generate profits, reflecting positively on the company's financial health and management effectiveness.