Use the Information That Follows Taken from Campbell Company's Financial

question 30

Multiple Choice

Use the information that follows taken from Campbell Company's financial statements for the years ending December 31, 2017 and 2016.
$\begin{array}{lrr}\text { Balance Sheet Information }&2017&2016\\\hline \text { Assets}\\\text { Cash } & \$ 25 & \$ 50 \\\text { Accounts receivable } & 60 & 70 \\\text { Inventory } & 40 & 30 \\\text { Land, building, and equipment } & \underline{225} & \underline{250} \\\text { Total Assets } & \$ \underline{350} & \$ \underline{400} \\\end{array}$

$\begin{array}{l}\text { Liabilities and Shareholders' Equity }\\\hline \text { Accounts payable } & \$ 85 & \$ 100 \\\text { Long term note payable } & 180 & 200 \\\text { Common stock } & 150 & 150 \\\text { Retained earnings } & \underline{(65) } &\underline{ (50) } \\\text { Total Liabilities \& Shareholders' Equity }& \underline{\$ 350 }& \underline{\$ 400 }\\\end{array}$

$\begin{array}{lr}\text { Income Statement Information }\\\text { Sales (all sales are on credit) } & \$ 850 \\\text { Cost of goods sold } & \underline{425} \\\text { Gross profit } & {425}\\\text { Operating expenses } & \underline{ 440} \\\text { Net income } &\$(15) \end{array}$
Calculate Campbell's return on equity and return on assets for the year ended December 31, 2017. Assume that the income tax rate is 30%. Also assume that in Campbell's industry, the industry average return on equity is 19% and the average return on assets is 11%.

• A)Campbell's return on equity and return on assets are better than average for Campbell's industry.
• B)Campbell's return on equity and return on assets are worse than average for Campbell's industry.
• C)Campbell's return on equity is better but return on assets is worse than average for Campbell's industry.
• D)Campbell's return on equity is worse but return on assets is better than average for Campbell's industry.

---

Definitions:

Comforting

involves providing consolation or support to someone who is distressed or saddened.

Distal Parenting

A parenting style where the child receives less direct supervision and more independence, often due to the physical distance between the parent and child.

Self-Aware

Refers to the conscious knowledge of one's own character, feelings, motives, and desires.

Erikson

Erik H. Erikson was a developmental psychologist and psychoanalyst known for his theory on the psychological development of human beings.