Exhibit 14 -Refer to Exhibit 14

question 86

Multiple Choice

Exhibit 14.9
Use the Information Below for the Following Problem(S)
The Rollerball Corporation's industry averages are as follows:
Net Profit Margin = 7.5%; Total Asset Turnover = 2.2; Total Assets/Equity = 2.0
Rollerball Corporation has the following financial statements for year ending 12/31/2008. (000's omitted)
$\begin{array}{lr}\text { Sales } & 5,450 \\\text { Cost of Goods Sold } & \underline{3,250} \\\text { Gross Profit } & 2,200 \\\text { Depreciation } & 820 \\\text { Operating Expenses } & 470 \\\text { Administration Exp. } & \underline{115} \\ \text { Operating Profit } 795 & \\\text { Interest Expense } & \underline{88}\\\text { Profit Before Taxes } & 707\\\text { Taxes } & \underline{247}\\\text { Net Income } & 460\\\text{Dividends} & 250\end{array}$
$\begin{array}{lrlr}\text { Assets } & & {\text { Liabilities }} \\\text { Cash } & 100 & \text { Notes Payable } & 850 \\\text { Accounts Receivable } & 1,250 & \text { Accounts Payable } & \underline{1,550} \\\text { Inventory } & \underline{1,125} & \text { Total Current Liab. } & 2,400 \\\text { Total Current Assets } & 2,475 & \text { Long Term Debt } & 425 \\\text { Net Fixed Assets } & \underline{1,450} & \text { Common Stock } & 400 \\\text { Total Assets } & 3,925 & \text { Retained Earnings } & \underline{700} \\& & \text { Total Liab. \& Earnings } & 3,925\end{array}$
-Refer to Exhibit 14.9.Calculate the return on equity (ROE) for Rollerball Corporation and the Industry.
Rollerball Industry Average

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Definitions:

Joint Stock Company

A form of business organization in which capital is divided into shares owned by shareholders, who enjoy limited liability and whose investment in the company can be bought and sold.

Manager-Managed

A management structure typically used in a Limited Liability Company (LLC) where one or more appointed managers are responsible for the company's day-to-day operations, as opposed to being member-managed.

Limited Liability Company

A business organization strategy that harmonizes the limited liability advantage of a corporation with the taxation simplicity of a partnership or sole proprietorship.

Operations Participation

The involvement or engagement in the ongoing activities or processes of an organization, project, or system.