Exhibit 10 The Zeco Company's Industry Averages Are as Follows:
Net Profit

Exhibit 10.8 USE THE INFORMATION B ELOW FOR THE FOLLOWING PROBLEM(S)
Zeco Company has the following financial statements for year ending 12/31/2008.
$\begin{array}{lr}\text { Sales } & 1,000,000 \\\text { Cost of Goods Sold } & 750,000\\\text { Gross Profit } & 250,000 \\\text { Depreciation } & 100,000 \\\text { Operating Expenses } & 70,000 \\\text { Administration Exp. } & 65,000\\\text { Operating Profit } 15,000\\\text { Interest Expense } & 8,000 \\\text { Frofit B efore Taxes } & 7,000 \\\text { Taxes } & 2,800\\\text { Net Income }&4,200\\\text { Dividends }&3,200\\\end{array}$
$\begin{array} { l }\begin{array}{lr}\text { Assets } & \\\text { Cash } & 50,000 \\\text { Accounts Receivable } & 250,000 \\\text { Inventory } & 325,000 \\\text { Total Current Assets } & 825,000 \\\text { Net Fixed Assets } & 450,000 \\\text { Total Assets } & 1,275,000\end{array}&\begin{array}{lr}\text { Liabilities } & \\\text { Notes Payable } & 250,000 \\\text { Accounts Payable } & 350,000 \\\text { Total Current Liab. } & 800,000 \\\text { Long Term Debt } & 225,000 \\\text { Common Stock } & 200,000 \\\text { Retained Earnings } & 50,000 \\\text { Total Liab. \& Earnings } & 1,275,000\end{array}\end{array}$
The Zeco Company's industry averages are as follows:
Net Profit Margin = 4.5%; Total Asset Turnover = 0.8; Total Assets/Equity = 1.5
-Refer to Exhibit 10.8. Calculate the return on equity (ROE) for Zeco Company and the Industry. $\begin{array}{lll}&\text { Zeco }&\text {Industry Average }\\\hline\text { a. } & 1.52 \% & 0.55 \% \\\text { b. } & 1.68 \% & 5.40 \% \\\text { c. } & 2.10 \% & 1.80 \% \\\text { d. } & 6.00 \% & 5.40 \% \\\text { e. } & 8.40 \% & 9.32 \%\end{array}$