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Hydro Company Balance Sheet December 31, 2020 Cash $ 40,000 Current Liabilities $ 80,000 Accounts Rec. (net) 80,000 10% Bonds payable 120,000 Inventory 130,000 Common

Hydro Company

Balance Sheet

December 31, 2020

Cash $ 40,000 Current Liabilities $ 80,000

Accounts Rec. (net) 80,000 10% Bonds payable 120,000

Inventory 130,000 Common Stock 200,000

Plant & Equip. (net) 250,000 Retained earnings 100,000

Total Assets $500,000 Total Liab. and S/H/E $500,000

Sales revenues for 2020 were $800,000, gross profit was $320,000, and net income was $36,000. The income tax rate was 40 percent. One year ago, accounts receivable (net) were $76,000, inventory was $110,000, total assets were $460,000, and stockholders' equity was $260,000. The bonds payable were outstanding all year and the 2020 interest expense was $12,000.

What was the firm's return on assets for 2020?

Select one:

a. 7.0 percent

b. 6.0 percent

c. 8.0 percent

d. 7.5 percent

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