Question

You have obtained the following information for Blue Bell Farms. The tax rate is 34 percent. Cash $ 124 Net fixed assets 2,498 Accrued expenses 135 Inventory 1,027 Long-term debt 1,876 Sales 3,850 Costs 2,220 Accounts payable 486 Depreciation 321 Interest paid 136 Accounts receivable 518 Dividends paid 281

What is the return on equity?

• 25.12%

• 46.36%

• 6.67%

• 42.74%

• 46.36%

• 25.12%

• 6.67%

• 18.42%

• 18.42%

• 42.74%

Answer 1

Income Statement

particulars	Amount
Sales	3850
less-cost of goods sold	(2220)
Depreciation	(321)
Interest	(136)
PBT	1173
Less - Tax@34%	398.82
Net Profit	774.18

Balance sheet

Assets	amount	Liabilties	Amount
cash	124	Accured expenses	135
Account receivables	518	Long term debt	1876
inventory	1027	Accont payable	486
Net fixed assets	2498	Shareholders equity (balance figure)	1670
Total	4167	total	4167

Return on equity = Net profit / Share holders equity = 774.18 / 1670 = 46.36%

Option B is correct that is 46.36%