10.Analysis of a company's financial statements: Below are simplified versions of the balance sheet and income statement for Toys by Tom, Inc. Use this information to answer the following question.

What is Toys by Tom, Inc. return on assets (ROA)?

• 6.9%
• 0.86
• 18%
• 1.2

TOYS BY TOM Balance Sheet TOYS BY TOM Income Statement For year ending December 31, 2006 For year ending December 31, 2006 Assets Liabilities & Owners' Equity Sales $ 12.00 Current Assets Current Liabilities 5 Less: COGS 8.40 Cash 0.50 Current portion, LTD 0.75 Less: Depreciation 0.80 Accounts receivable 1.00 Accounts payable 2.50 Gross profit 2.80 Inventories 2.50 Other accrued expenses 1.75 Less: SG&A 1.20 Total current assets 4.00 Revolving credit, bank 2.00 Operating profit 1.60 Net fixed assets 10.00 Total current liabilities 7.0 Less: Interest expense 0.25 Long-term (mortgage) debt 2.50 Profit before tax 1.35 Net worth 4.50 Less: Income taxes 0.54 Net Income Total Assets $ 14.00 $ 14.00 $ 0.81 Total Liab. & Net Worth * Items in $1,000 * Items in $1,000