Note: The common shares are trading in the stock market for $15 per share.

Refer to the financial statements of Flathead Lake Manufacturing Company. The firm's return on equity ratio for 2015 is _________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

A. 6.5% | B. 26.5% | C. 33.4% | D. 38%

Flathead Lake Manufacturing Income Statement 2015 Sales Cost of Goods Sold Depreciation Expense Gross Profit Selling and Administrative Expenses EBIT Interest Expense Income before Tax Taxes Net Income $9,300,000 5,750,000 550,000 $3,000,000 2,200,000 800,000 200,000 S 600,000 375,000 S 225,000 Flathead Lake Manufacturing Comparative Balance Sheets 2015 2014 Cash Accounts Receivable Inventory $ 50,000 40,000 600,000 460,000 $1,150,000 $1,100,000 2,050,000 1,400,000 $ 3,200,000 $2,500,000 570,000 530,000 Total Current Assets Fixed Assets Total Assets Accounts Payable Bank Loans 320,000 300,000 400,000 800,000 700,000 1,500,000 1,000,000 $2,300,000 $1,700,000 200,000 200,000 600,000 $ 900,000 800,000 $3,200,000 $2,500,000 480,000 Total Current Liabilities Long-term Bonds Total Liabilities Common Stock (200,000 shares) Retained Earnings 700,000 Total Equity Total Liabilities and Equity