Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Question 92
Using Financial Statements for 2020,
TRUE OR FALSE
Transcribed Image Text:### Educational Finance Overview
#### Balance Sheet (2020)
**Assets**
- **Cash:** $280,000
- **Accounts Receivable:** $117,600
- **Inventory:** $89,600
- **Prepaid Expenses:** $14,000
- **Total Current Assets:** $501,200
- **Fixed Assets:** $33,600
- **Total Assets:** $534,800
**Liabilities & Equity**
- **Liabilities**
- **Accounts Payable:** $90,916
- **Notes Payable:** $48,132
- **Accrued Expenses:** $42,784
- **Taxes Payable:** $37,436
- **Deferred Taxes:** $48,132
- **Total Current Liabilities:** $267,400
- **Long-Term Notes:** $123,004
- **Total Liabilities:** $390,404
- **Equity**
- **Capital Stock:** $53,480
- **Retained Earnings:** $90,916
- **Total Equity:** $144,396
**Total Liabilities & Equity:** $534,800
#### Income Statement (2020)
- **Sales:** $530,000
- **Cost of Goods Sold:** $148,400
- **Gross Profit:** $381,600
- **Interest Income:** $53,200
- **Total Income:** $434,800
**Expenses**
- **Sales Salaries:** $121,900
- **Office Salaries:** $26,500
- **Office Equipment Rental:** $37,100
- **Interest Expense:** $15,900
- **General & Administrative:** $4,770
- **Total Expenses:** $206,170
**Net Income**
- **Income Before Tax:** $228,430
- **Income Taxes:** $132,500
- **Net Income:** $95,930
This financial overview provides a snapshot of the company's financial health in 2020, detailing assets, liabilities, equity, and performance through its income and expenses.
Expert Solution
Step 1
Return on equity
= Net Income / Total Equity
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