Chapter 2: 30BP_d (page 85)

Omni Technology Holding Company has the following three affiliates:
Software
Personal Computers
Foreign Operations
Sales
$40,200,000
$60,080,000
$100,680,000
Net Income (after tax)
2,086,000
2,880,000
8,510,000
Assets
5,820,000
25,790,000
60,630,000
Stockholder’s equity
4,090,000
10,170,000
50,950,000
d. Which affiliate has the highest return on stockholders’ equity?

Short Answer

Expert verified

The return on stockholder’s equity of Software (i.e. 51%) is the highest.

Step by step solution

Return on Stockholder’s equity of Software

$\begin{array}{rcl} Return on stockholder' s equity & = & \frac{Net income}{Stockholder' s equity} \\ = & \frac{$ 2, 086, 000}{$ 4, 090, 000} \\ = & 51 % \end{array}$

Return on stockholder’s equity of Personal computers

$\begin{array}{rcl} Return on stockholder' s equity & = & \frac{Net income}{Stockholder' s equity} \\ = & \frac{$ 2, 880, 000}{$ 10, 170, 000} \\ = & 28.32 % \end{array}$

Return on stockholder’s equity of Foreign operations

$\begin{array}{rcl} Return on stockholder' s equity & = & \frac{Net income}{Stockholder' s equity} \\ = & \frac{$ 8, 510, 000}{$ 50, 950, 000} \\ = & 16.70 % \end{array}$

Unlock Step-by-Step Solutions & Ace Your Exams!

Full Textbook Solutions
Get detailed explanations and key concepts
Unlimited Al creation
Al flashcards, explanations, exams and more...
Ads-free access
To over 500 millions flashcards
Money-back guarantee
We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

Recommended explanations on Business Studies Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Stud Clothier
Balance sheet 20X1
Assets		Liabilities and Equity
Cash	\)60,000	Account payable	\(220,000
Account receivable	240,000	Accrued taxes	30,000
Inventory	350,000	Bonds payable (long term)	150,000
Plant and equipment	410,000	Common stock	80,000
		Paid in capital	200,000
		Retained earnings	380,000
Total assets	\)1,060,000	Total LIbilities and Equity	$1,060,000

Stud Clothier
Balance sheet 20X1
Assets		Liabilities and Equity
Cash	\)60,000	Account payable	\(220,000
Account receivable	240,000	Accrued taxes	30,000
Inventory	350,000	Bonds payable (long term)	150,000
Plant and equipment	410,000	Common stock	80,000
		Paid in capital	200,000
		Retained earnings	380,000
Total assets	\)1,060,000	Total LIbilities and Equity	$1,060,000

Indicate whether item is on Balance sheet (BS) or Income statement (IS)	If on Balance sheet, designate which category	Item
		Accounts receivable
		Retained earnings
		Income tax expense
		Accrued expense
		Cash
		Selling and administrative expenses
		Plant and equipment
		Operating expenses
		Marketable securities
		Interest expense
		Sales
		Notes payable (6 month)
		Bonds payable, maturity 2019
		Common stock
		Depreciation expense
		Inventories
		Capital in excess of par value
		Net income (earning after tax)
		Income tax payable

Short Answer

Step by step solution

Return on Stockholder’s equity of Software

Return on stockholder’s equity of Personal computers

Return on stockholder’s equity of Foreign operations

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Intermediate Accounting

Corporate Finance

Nature of Business

Introduction to Business

Change Management

Business Case Studies

Study anywhere. Anytime. Across all devices.

	Software	Personal Computers	Foreign Operations
Sales	\(40,200,000	\)60,080,000	$100,680,000
Net Income (after tax)	2,086,000	2,880,000	8,510,000
Assets	5,820,000	25,790,000	60,630,000
Stockholder’s equity	4,090,000	10,170,000	50,950,000