Galaxy United, Inc. 2009 Income Statement ($ in millions) Net sales $8,550 Less:

Question

Galaxy United, Inc. 2009 Income Statement ($ in millions) Net sales $8,550 Less: Cost of goods sold 7,190 Less: Depreciation 400 Earnings before interest and taxes 960 Less: Interest paid 82 Taxable Income 878 Less: Taxes 307 Net Income $ 571 Galaxy United, Inc. 2008 and 2009 Balance Sheets ($ in millions) 2008 2009 Cash $ 120 $ 160 Accounts rec. 930 790 Inventory 1,490 1,520 Sub-total $2,540 $2,470 Net fixed assets 3,250 3,620 Total assets $5,790 $6,090 2008 2009 Accounts payable $1,110 $1,140 Long-term debt 980 1,180 Common stock $3,180 $2,980 Retained earnings 520 790 Total liab. & equity $5,790 $6,090 What is the return on equity for 2009? 10 percent 18 percent  16 percent  15 percent  13 percent

Explanation / Answer

Reurn on Equity = Net Income/Total Equity

Net Income for 2009 =$571

Equity = Commons Stock +retained earnings

=2980 +790

=3770

= 570/3770

=15.11%

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