Pettijohn Inc.

The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.

Balance Sheet (Millions of $) Assets2016Cash and securities$ 1,554.0Accounts receivable9,660.0Inventories 13,440.0Total current assets$24,654.0Net plant and equipment 17,346.0Total assets$42,000.0Liabilities and Equity Accounts payable$ 7,980.0Notes payable5,880.0Accruals 4,620.0Total current liabilities$18,480.0Long-term bonds 10,920.0Total debt$29,400.0Common stock3,360.0Retained earnings 9,240.0Total common equity$12,600.0Total liabilities and equity$42,000.0 Income Statement (Millions of $)2016Net sales$58,800.0Operating costs except depr'n$54,978.0Depreciation$ 1,029.0Earnings bef int and taxes (EBIT)$ 2,793.0Less interest 1,050.0Earnings before taxes (EBT)$ 1,743.0Taxes$ 610.1Net income$ 1,133.0Other data: Shares outstanding (millions)175.00Common dividends$ 509.83Int rate on notes payable & L-T bonds6.25%Federal plus state income tax rate35%Year-end stock price$77.69

Refer to the data for Pettijohn Inc. What is the firm's ROA?

A) 2.70%

B) 2.97%

C) 3.26%

D) 3.59%

E) 3.95%