What is the firm's return on equity ratio for 2009?

The formula is as follows:

$222,00/[($850,000 + $650,000)/2] = 0.2960

Please provide a thorough explaination of the entire problem. i.e, why are we taking total current liabilities and adding 650k and dividing by 2. Where is the 650k coming from. Why do we then divide that by net income?

Snapit Company Income Statement (2009) Sales Cost of goods sold Gross profit Selling and administrative expenses Operating profit Interest expense Income before tax Tas expense Net income $4,000,000 3.040,000 960.000 430.000 530.000 160,000 370,000 148,000 $222,000 Balance Sheet 2008 Cash Accounts receivable Inventory Total current assets Fixed assets Total assets 2009 $60,000$50,000 550,000 500,000 690.000 1,300,000 1,170,000 1.300,000 1,230,000 2,600,000 2,400,000 20.000 270,000 580,000 500,000 850,000 750,000 900,000 1,000,000 1.750.000 1.750.000 250,000 600.000 $2.600,000 $2.400,000 250,000 Accounts pavable Bank loan Total current liabilities Bonds payable Total liabilities Common stock (25.000 shares) Retained earnings Total liabilities & equity 250,000 400,000 Note: The common shares are trading in the stock market for S100 each