A Firm Has Total Assets of $900,000 and Total Liabilities

question 2

Multiple Choice

A firm has total assets of $900,000 and total liabilities of $400,000. There are no preference shareholders. Earnings before interest and taxes are $100,000. Interest is $21,000 and taxes are $34,000. The return on ordinary shareholders' funds is:

• A)8.0%.
• B)12.5%.
• C)9.0%.
• D)3.8%.

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Definitions:

Synonymous Terms

Words or phrases that have nearly the same meaning or significance.

Small Business Administration

A U.S. government agency that provides support to entrepreneurs and small businesses, including funding and educational resources.

Small Businesses

Small businesses are independently owned and operated companies that are limited in size and revenue, depending on the industry.

Personal Communication

Direct interaction between individuals, allowing for the exchange of information or ideas.