-Parton Company began operation on January 1, 2008. The initial investment by the owners was $100,000. The following information was extracted from the company's records.
Required:
a. Compute the return on equity for each year. (Assume a $0 inventory for January 1, 2008). Has the company been effective at managing the capital provided by the equity owners?
b. Does the information about inventory and the cost of goods sold indicate any reason for the trend in return on equity? Support your answer with any relevant ratios.

Question

-Parton Company began operation on January 1, 2008. The initial investment by the owners was $100,000. The following information was extracted from the company's records.
  Required: 
a. Compute the return on equity for each year. (Assume a $0 inventory for January 1, 2008). Has the company been effective at managing the capital provided by the equity owners?
b. Does the information about inventory and the cost of goods sold indicate any reason for the trend in return on equity? Support your answer with any relevant ratios.

Quizplus · Accepted Answer

The Answer of    
-Parton Company began operation on January 1, 2008. The initial investment by the owners was $100,000. The following information was extracted from the company's records.
  Required: 
a. Compute the return on equity for each year. (Assume a $0 inventory for January 1, 2008). Has the company been effective at managing the capital provided by the equity owners?
b. Does the information about inventory and the cost of goods sold indicate any reason for the trend in return on equity? Support your answer with any relevant ratios.

-Parton Company Began Operation on January 1, 2008