For the Current Year, Company a Had Sales of $450,000

question 49

Multiple Choice

For the current year, Company A had sales of $450,000, net income of $290,000 and average common Stockholders' Equity of $940,000. During the same year, Company B had sales of $200,000, net income of $160,000 and average common Stockholders' Equity of $410,000. Which of the following statements is TRUE regarding this situation?

• A)Company A has a better return on equity, $290,000 compared to Company B's $160,000.
• B)Company B has a better return on equity, 39.02% compared to Company A's 30.85%.
• C)Company A has a better return on equity, $450,000 compared to Company B's $200,000
• D)Company B has a better return on equity, 80.00% compared to Company A's 64.44%.

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Definitions:

Price

The amount of money expected, required, or given in payment for something.

Sales Contract Formation

The process through which parties agree upon the terms of a sale, resulting in a legally binding contract encompassing the sale of goods or services.

Interpretation

The act of explaining, reframing, or understanding the meaning or significance of something.

Tangible Things

Physical items that can be seen, touched, and measured, as opposed to intangible items like rights or patents.