Bcorporation has an operating profit margin (ebit/revenue) of 11%; an asset turnover ratio of 1.2; a financial leverage multiplier of 1.5 times; an average tax rate of 35%; and an interest burden of 0.8. b corporation’s return on equity is closest to:

The return on equity for B corporation is 19.8%

Explanation:

According to the Dupont formula the return on equity is a product of asset turnover ratio , financial leverage and profit margin.

So in order to find the return on equity we have to multiply the profit margin, asset turnover ratio and financial leverage multiplier.

0.11*1.2*1.5= 0.198=19.8%

The return on equity for B corporation is 19.8%

Raw Material (Dr.) $4,900

Accounts Payable (Cr.) $4,900

Factory Labor wages (Dr.) $1,400

Cash (Cr.) $1,400

Additional Overheads (Dr.) $1,300

Accumulated Depreciation (Cr.) $800

Accounts Payable (Cr.) $500

Explanation:

Work in process inventory (Dr.) $5,750

Manufacturing Overhead (Cr.) $5,750

Finished Goods Inventory (Dr.) $20,600

Work in process inventory (Cr.) $20,600