A firm has total assets of $800,000 and total liabilities of $200,000. If profit after tax and interest is $150,000, the return on shareholders' funds is:
A)25%.
B)8%.
C)12.5%.
D)9%.

Question

Quizplus · Accepted Answer

The return on shareholders' funds is calculated as (Profit after tax and interest / Shareholders' funds) * 100. Shareholders' funds equal total assets minus total liabilities, which is $800,000 - $200,000 = $600,000. Therefore, the return is ($150,000 / $600,000) * 100 = 25%.

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