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Remaining Time: 12 minutes, 12 seconds. Question Completion Status Moving to another question will save this response. Question Use the information provided below to answer the question. The ratios are for last year, for ABC Inc and the average of its industry as follows Values are for, repectively: ABC Inc; Industry Avcrage Inventory $150,000; $100,000 Accounts Receivable $24,000; $24,000 Other Assets $ 76,000: 576,000 Total Assets $250,000; $200,000 Return on Assets 6.25% ; 6.25% Common Equity $125,000; $125,000 Sales $1,000,000; $1,000,000 Calculate ABC's Return on Equity Oa.13.5% 12.5 % 01 120% d, 11.5% .. 11.0% 018-04.49AM 701 AM

Explanation / Answer

Net Income = Average Asset * Return on Asset

                  = 250000 * 6.25%

                  = 15625

Return on Equity = Net Income/ Average Equity

                         =15625/125000

                         = 12.5% (ANSWER)

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