US CORPORATION Balance Sheets as of December 31 2015 and 201

U.S. CORPORATION Balance Sheets as of December 31, 2015 and 2016 $ in Millions) 2016 2016 Liabilities and Owners Equity Current assets Current liabilities s 160 Accounts payable Cash Accounts receivable s 266 123 S 389 688 Notes payable Total 555 $1,403 Total Fixed assets $1.709 Long-term debt Owners equity Net fixed assets s 454 Common stock and paid-in surplus Retained earnings 640 ,629 $2,269 3,112 Total Total assets 3,112 Total liabilities and owners\' equity U.S. CORPORATION 2016 Income Statement $ in Millions) $1,509 750 65 $ 694 70 $ 624 212 $ 412 Net sales Cost of goods sold Earnings before interest and taxes Interest paid Taxable income Net income $103 309 Addition to retained earnings What is the ROE (Return on Equity) for US Corporation?

Solution

Return on Equity [ROE] = Net income/Shareholders equity*100

Net income = 412

Shareholders’ equity = Common stock and paid in capital + Retained earnings

Shareholders’ equity = 640 + 1629 = 2269

Return on Equity [ROE] = 412/2269*100 = 18.16%

Return on Equity [ROE] = 18.16%

Hence Option d 18.16% is the correct answer