The Following Comes from Simon Company's Year-End Financial Statements: Sales

question 82

Multiple Choice

The following comes from Simon Company's year-end financial statements: Sales $250,000, Cost of goods sold $100,000, Net income $12,500, Total assets $187,500 and Total liabilities $67,500.The return on equity (ROE) for the year is closest to?

• A)6.6%
• B)10.4%
• C)133.3%
• D)208.3%

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Definitions:

Significant Influence

Control exerted by an investor over a subsidiary or associate, typically through ownership of a substantial portion of voting stock, allowing the investor to affect financial and operating policies.

Equity Method

An accounting technique used by a company to record investments in other companies where it has significant influence but does not have full control.

Consolidated Financial Statements

Financial statements that combine the financial information of a parent company with its subsidiaries to present a single set of statements for the entire group.

FVTPL

Fair Value Through Profit or Loss, an accounting strategy whereby financial assets are valued at their current market price, with changes in fair value recorded in the profit or loss statement.