Pacific Fixtures lists the following accounts as part of its balance sheet.
|
Total assets
|
$10,000,000
|
|
Account 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 stockholder's equity
|
$10,000,000
|
Compute the return on stockholder's equity if the company has sales of $20 millions and the following net profit margin:
a. 3 percent
b. 5 percent