A firm has total assets of $800,000 and total liabilities of $200,000. If profit after tax and interest is $120,000, the return on shareholder's funds is:
A) 12.5%.
B) 9%.
C) 20%.
D) 8%.

Question

Quizplus · Accepted Answer

Shareholder's funds = Total assets - Total liabilities = $800,000 - $200,000 = $600,000 
Return on shareholder's funds = (Profit after tax and interest/Shareholder's funds) x 100% 
= ($120,000/$600,000) x 100% = 20%

A Firm Has Total Assets of $800,000 and Total Liabilities