The Balance Sheets at the End of Each of the First

question 24

Multiple Choice

The balance sheets at the end of each of the first two years of operations indicate the following: ? $\begin{array}{lrr}&2017&2018\\\text { Total current assets } & \$ 600,000 & \$ 560,000 \\\text { Total investments } & 60,000 & 40,000 \\\text { Total property, plant, and equipment } & 900,000 & 700,000 \\\text { Total current liabilities } & 125,000 & 80,000\\\text { Total long-term liabilities } & 350,000 & 250,000 \\\text { Preferred } 9 \% \text { stock, } \$ 100 \text { par } & 100,000 & 100,000 \\\text { Common stock, } \$ 10 \text { par } & 600,000 & 600,000 \\\text { Paid-in capital in excess of par-common stock } & 60,000 & 60,000 \\\text { Retained earnings } & 325,000 & 210,000\end{array}$ ?
Based on the above information, if net income is $130,000 and interest expense is $40,000 for 2017, what is the return on stockholders' equity for 2017 (round to one decimal place) ?

• A) 16.5%
• B) 12.7%
• C) 12.0%
• D) 13.2%

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Definitions:

National Culture

The set of norms, behaviors, beliefs, and customs that characterize the people of a specific country or nation.

Future Orientation

Future orientation is the degree to which individuals think about and plan for the future, influencing decision-making, goal setting, and behaviors in pursuit of long-term achievements.

GLOBE Project

An extensive and ongoing cross-cultural research program analyzing the impact of culture on leadership effectiveness and organizational practices across the world.

Long-Term Planning

The process of setting major goals and objectives and outlining the strategies to achieve them over an extended period, usually several years into the future.