Err Company has a major lawsuit against them for unsafe products. It recognizes a huge liability in 2004 of $300M. The effect of this liability is to decrease stockholders' equity by 50%. In 2005, the effect of recognizing this liability, all else equal, is:

a. return on net operating assets will increase

b. Return on net operating assets will decrease

c. Return on equity will increase

d. Return on equity will decrease