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MEGAFRAMECOMPUTERCOMPANY BalanceSheet AsatDecember31, 20X5ASSETS
| Cash | $40,000 |
| Accounts receivable | 60,000 |
| Inventory | 90,000 |
| New plant and equipment | 220,000 |
| Total Assets | $410,000 |
| LIABILITIES AND SHAREHOLDERS EQUITY |
| Accounts payable | $60,000 |
| Accrued expenses | 40,000 |
| Long-term debt | 130,000 |
| Common stock | 80,000 |
| Retained earnings | 100,000 |
| Total Liabilities and Shareholders Equity | $410,000 |
MEGAFRAMECOMPUTERCOMPANY IncomeStatement FortheyearendedDecember31, 20X5
| Sales (all on credit) | $700,000 |
| Cost of goods sold | 400,000 |
| Gross profit | 300,000 |
| Selling and administrative expense | 100,000 |
| Operating profit | 200,000 |
| Interest expense | 40,000 |
| Net income before taxes | 160,000 |
| Taxes (50%) | 80,000 |
| Net income | 80,000 |
Using the DuPont method, return on assets (investment) for Megaframe Computer is approximately:
a.
25%.
b.
20%.
c.
15%.
d.
29%.
Answer & Explanation
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