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 7,180 Less: Depreciation 400 Earnings before interest and taxes 970 Less: Interest paid 80 Taxable Income 890 Less: Taxes 312 Net income $ 579 Galaxy United, Inc. 2008 and 2009 Balance Sheets ($ in millions) 2008 2009 2008 2009 Cash $ 120 $ 140 Accounts payable $1,120 $1,150 Accounts rec. 940 780 Long-term debt 960 1,222 Inventory 1,470 1,520 Common stock $3,110 $2,910 Sub-total $2,530 $2,440 Retained earnings 500 778 Net fixed assets 3,160 3,620 Total assets $5,690 $6,060 Total liab. & equity $5,690 $6,060 What is the return on equity for 2009?

Explanation / Answer

Return on Equity Net Income/ Average Shareholders Equity 2008 2009 Common Stock 3110 2910 Retained Earnings 500 778 Shareholders Equity 3610 3688 Average Shareholders Equity (3610+3688)/2 3649 Return on Equity 579/3649 15 15.87%

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