Income Statement (in million of USDs) 2015 Total sales 202 Cost of sales -148 Gross Profit 54 Selling, general, and administrative expenses -22 Research and development -8 Depreciation and amortization -4 Other income 4 Earnings before interest and taxes (EBIT) 24 Interest income (expense) -7 Pretax income 17 Taxes -4 Net Income 13 Balance Sheet (in million of USDs) Assets Liabilities Current Assets Current Liabilities Cash 62 Accounts payable 42 Accounts receivable 46 Notes payable/short-term debt 1 Inventories 5 Total current assets 113 Total current liabilities 43 Long-Term Assets Long-Term Liabilities Net property, plant, and equipment 101 Long-term debt 98 Total long-term assets 101 Total long-term liabilities 98 Total Liabilities 141 Stockholders\' Equity 73 Total Assets 214 Total Liabilities and Stockholders\' Equity 214 The above tables show the income statement and balance sheet for a certain company. All quantities shown are in millions of dollars. 1. What is the company\'s ROE in 2015? 2. What is the company\'s ROA in 2015? 3. If the corporation has 20 million shares outstanding, what is its EPS in 2015? 4. Now consider that additionally the company\'s managers and employees have stock options for 5 million shares; what is its diluted EPS in 2015? Income Statement (in million of USDs) 2015 Total sales 202 Cost of sales -148 Gross Profit 54 Selling, general, and administrative expenses -22 Research and development -8 Depreciation and amortization -4 Other income 4 Earnings before interest and taxes (EBIT) 24 Interest income (expense) -7 Pretax income 17 Taxes -4 Net Income 13 Solution 1) ROE = Net income/Equity = $13/$73 = 17.81% 2) ROA = Net income/Total assets = $13/$214 = 6.07% 3) EPS = Net income/Number of shares outstanding = $13,000,000/20,000,000 = $0.65 4) Diluted EPS = Net income/Number of shares outstanding = $13,000,000/25,000,000 = $0.52.

1. Income Statement (in million of USDs)
2015
Total sales
202
Cost of sales
-148
Gross Profit
54
Selling, general, and administrative expenses
-22
Research and development
-8
Depreciation and amortization
-4
Other income
4
Earnings before interest and taxes (EBIT)
24
Interest income (expense)
-7
Pretax income
17
Taxes
-4
Net Income
13
Balance Sheet (in million of USDs)
Assets
Liabilities
Current Assets
Current Liabilities
Cash
62
Accounts payable
42

2. Accounts receivable
46
Notes payable/short-term debt
1
Inventories
5
Total current assets
113
Total current liabilities
43
Long-Term Assets
Long-Term Liabilities
Net property, plant, and equipment
101
Long-term debt
98
Total long-term assets
101
Total long-term liabilities
98
Total Liabilities
141
Stockholders' Equity
73
Total Assets
214
Total Liabilities and Stockholders' Equity
214
The above tables show the income statement and balance sheet for a certain company. All
quantities shown are in millions of dollars.
1. What is the company's ROE in 2015?
2. What is the company's ROA in 2015?
3. If the corporation has 20 million shares outstanding, what is its EPS in 2015?
4. Now consider that additionally the company's managers and employees have stock options
for 5 million shares; what is its diluted EPS in 2015?
Income Statement (in million of USDs)

3. 2015
Total sales
202
Cost of sales
-148
Gross Profit
54
Selling, general, and administrative expenses
-22
Research and development
-8
Depreciation and amortization
-4
Other income
4
Earnings before interest and taxes (EBIT)
24
Interest income (expense)
-7
Pretax income
17
Taxes
-4
Net Income
13
Solution
1)
ROE = Net income/Equity
= $13/$73
= 17.81%
2)
ROA = Net income/Total assets
= $13/$214
= 6.07%

4. 3)
EPS = Net income/Number of shares outstanding
= $13,000,000/20,000,000
= $0.65
4)
Diluted EPS = Net income/Number of shares outstanding
= $13,000,000/25,000,000
= $0.52