Financial Statements for Laroche Company Appear Below:

Shareholders' Equity

question 169

Multiple Choice

Financial statements for Laroche Company appear below:

Shareholders' Equity:
$\begin{array}{|l|r|}\hline & \begin{array}{r}\text { Larned Company } \\\text { Income Statement }\\\text { For the Year Ended December 31, Year 2 }\\\text { (dollars in thousands) }\end{array} \\\hline \text { Sales (All on Account) } & \$ 2250 \\\hline \text { Costs of Goods Sold } & \$ 1570 \\\hline \text { Gross Margin } & \$ 680 \\\hline \text { Operating Expenses } & \$ 270 \\\hline \text { Net Operating Income } & \$ 410 \\\hline \text { Interest Expense } & \$ 30 \\\hline \text { Net Income before Taxes } & \$ 380 \\\hline \text { Income Taxes }(30 \%) & \$ 114 \\\hline \text { Net Income } & \$ 266 \\\hline\end{array}$
Total dividends during Year 2 were $\$ 166,000$ , of which $\$ 10,000$ were preferred dividends. The market price of a common share on December 31, Year 2 was $\$ 150$ .

-Laroche Company's return on common shareholders' equity for Year 2 was closest to which of the following?

• A) 21.2%.
• B) 22.0%.
• C) 23.1%.
• D) 24.0%.

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Definitions:

Full-Rectification

The conversion of AC (alternating current) to DC (direct current) using both halves of the input waveform, usually in power supply or electronic signal processing.

Rotor

The rotating part of an electrical or mechanical device, such as the part in an electric generator or motor which turns around a stationary part called a stator.

Stator

(1) A stationary element in a rotating component; (2) The stationary member of an alternator into which electrical current is induced by the rotor; (3) Intermediary in a torque converter torus located between the impeller and turbine; redirects oil from the turbine back to the impeller.

Rectifier

An electrical device that converts alternating current (AC) to direct current (DC), often used in power supply systems.