Section 3

Assume the following income statement for a company:

INCOME STATEMENT

Sales $100,000 COGS $40,000 Labor expense $10,000 Supplies expense $10,000 Marketing expense $10,000 Operating profit $30,000

Depreciation expense $10,000 Income before taxes $20,000 Taxes $5,000 Net Income $15,000

What is the profit margin for this company?

Group of answer choices

40%

30%

15%

20%

Assume the following statements for a company:

INCOME STATEMENT

Sales $100,000 COGS $40,000 Labor expense $10,000

Income before taxes $50,000 Taxes $20,000 Net Income $30,000

BALANCE SHEET

ASSETS

Cash and Accounts Receivable $100,000 Inventory $200,000 Land $100,000 Total Assets $400,000 LIABILITIES AND EQUITY

Accounts Payable $100,000 Common Stock $100,000 Retained Earnings $200,000

Total Liabilities and Equity $400,000

Compute the ROE for this company.

Group of answer choices

7.5%

30.00%

10.00%

33.33%