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Pacific Fixtures lists the following accounts as part of its balance sheet.
Total assets $10,000,000
Accounts payable $ 2,000,000
Notes payable (8%) 1,000,000
Bonds (10%) 3,000,000
Common stock at par 1,000,000
Contributed capital in excess of par 500,000
Retained earnings 2,500,000
Total liabilities and stockholders' equity $10,000,000

Compute the return on stockholders' equity if the company has sales of $20 million and the following net profit margin:
a. 3 percent
b. 5 percent

 

Basic Finance, Finance

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