Last year Harrington Inc. had sales of $325,000 and a net income of $19,000, and its year-end assets were $250,000. The firm's total-debt-to-total-assets ratio was 67.5%. Based on the DuPont equation, what was the ROE?

The ROE was 23.33%

Explanation:

To calculate the ROE, first we have to calculate the next:

1) Total asset turnover=Sales/Total assets

=(325000/250,000)=1.3

2) Debt to total asset=Debt/Total assets

Hence debt=0.675*$250,000=$168,750

3) Total assets=Total liabilities+Total equity

Total equity=($250,000-$168,750)=$81,250

4) Equity multiplier=Total assets/Equity

=$250,000/$81,250=3.07(Approx)

5) Profit margin=Net income/Sales

=(19000/325000)=5.84615385%(Approx)

Finally we have to calculate the ROE

ROE=Profit margin*Total asset turnover*Equity multiplier

=5.84615385*3.07*1.3

= 23.33% Approx

The correct answer is the option C: the Macro Islands have a comparative advantage in producing fishing boats and the Micro Islands have a comparative advantage in producing guava jelly.

Explanation:

To begin with the term of ''comparative advantage'' is refer to the quality of one country in comparison with another to produce in a better way, a more eficient way, a good. Therefore that when a country has a comparative advantage over another country it means that the first country can produce more of a good with less resources that the second country.

That is why, that the Macro Islands have a comparative advantage in producing fishing boats over the Micro islands due to the fact that there is a very little difference with the other country meanwhile the Micro Islands have a comparative advatange in the production of guava jelly due to the amount of goods that it can produce in the same amount of time with the great amount difference in comparison with the Macro Islands. Therefore that one country chooses to produce the good in which it is better in comparison with the other.