question archive ABC Corp's total common equity at the end of last year was $510,000 and its net income was 570,000
ABC Corp's total common equity at the end of last year was $510,000 and its net income was 570,000
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ABC Corp's total common equity at the end of last year was $510,000 and its net income was 570,000. What was Select one: a. 11.39% b. 16.33% c. 13.73% d. 16.06% O e. 16,61% ABC Inc. expects $590 million of sales this year, and it forecasts a 15% increase for next year. The different levels of sales: Inventories = $30.2 -0.25(Sales). All dollars are in millions. What is the elect one: a. 3.84 times h 24 times
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Ans 1: Given Common equity at end of year = $510,000
Net income for the year = $70,000
Return on equity(ROE) = Net income/Common equity
ROE = $70,000/$510,000
ROE = 0.13725
Or ROE = 13.73% rounded to 2 digits.
Ans 2:
Given current sales = $590 Million
Increase in sales = 15%
Next year sales = 590 x (1+15%) = 678.50
Inventories = $30.2 + 0.25(678.50) = 199.825 million
Inventories turnover = Sales/inventory
= 678.50/199.825
= 3.395 or 3.40 times rounded
