The Financial Statements of Snapit Company Are Given Below

question 75

Multiple Choice

The financial statements of Snapit Company are given below. $\begin{array}{c} \text { Snapit Company } \\\text { Income Statement (2009) }\\\begin{array}{lrr} \hline \text { Sales } & \$ 4,000,000 \\\text { Cost of goods sold } & \underline {3,040,000} \\\text { Gross profit } & 960,000 \\\text { Selling \& administrative expenses } & \underline { 430,000} \\\text { Operating profit } & 530,000 \\\text { Interest expense } & \underline {160,000 }\\\text { Income before tax } & 370,000 \\\text { Tax expense } & \underline {148,000} \\ \text { Net income } & \underline {\$ 222,000} \\\end{array} \end{array}$
$\begin{array}{c}\begin{array}{lll} \text { Balance Sheet } &2009\\\\ \text { Cash } &\$ 60,000 \\ \text { Accounts receivable } & 550,000 \\ \text { Inventory } & \underline {690,000} \\ \text {Total current assets } &\$ 1,300,000 \\ \text {Fixed assets } & \underline {1,300,000} \\ \text { Total assets } & \underline {\$ 2,600,000} \\\\ \text { Accounts Payable } &\$ 270,000 \\ \text { Bank loan } & \underline {580,000 } \\ \text { Total current liabilities } & \$ 850,000 \\ \text {Bond payable } & \underline { 900,000} \\ \text { Total liabilities } & \underline {\$ 1,750,000 }\\ \text { Common stock ( 130,000 shares) } & \$ 2500,000 \\ \text {Retained earnings } & \underline {600,000}\\ \text { Total liabilities \& equity } & \underline {\$ 2,600,000} \\\end{array}\begin{array}{lll}2008\\\\\$ 50,000 \\500,000 \\ \underline { 620,000 }\\ \$ 1,170,000 \\ \underline { 1,230,000} \\ \underline { \$ 2,400,000 }\\\\\$ 250,000 \\ \underline { 500,000 } \\ \$ 750,000 \\ \underline {1,000,000} \\ \underline {\$ 1,750,000 }\\\$ 250,000\\ \underline {400,000} \\ \underline { \$ 2,400,000 } \\\end{array}\end{array}$
Note: The common shares are trading in the stock market for $100 each. Refer to the financial statements of Snapit Company. The firm's return on equity ratio for 2009 is

• A) 0.1235.
• B) 0.0296.
• C) 0.2960.
• D) 2.2960.

---

Definitions:

Body Plan

The general structure and arrangement of body parts in an organism.

Malpighian Tubules

The excretory organs of many arthropods.

Excretion

The discharge from the body of a waste product of metabolism (not to be confused with the elimination of undigested food materials). Compare with elimination.

Coral Reefs

Coral reefs are diverse underwater ecosystems held together by calcium carbonate structures secreted by corals, located in tropical marine waters rich in biodiversity.