Answer and Explanation:
The computation is shown below:-
Incorrect
ROA = Net Income ÷ Average assets
= $101,900 ÷ (($550,000 + $573,000) ÷ 2)
= $101,900 ÷ $561,500
= 0.18
ROE = Net Income ÷ Average equity
= $101,900 ÷ (($340,000 + 356,000) ÷ 2)
= $101,900 ÷ $348,000
= 0.29
Debt Ratio = Total debt ÷ Average Assets
= $217,000 ÷ (($550,000 + $573,000) ÷ 2)
= $217,000 ÷ $561,500
= 0.39
EPS = Net Income ÷ Number of Common Shares
= $101,900 ÷ 22,000
= $4.63
Correct
ROA = Net Income ÷ Average assets
= ($101,900 - $8,500) ÷ (($550,000 + $573,000 - $8,500) ÷ 2)
= $93,400 ÷ $557,250
= 0.17
ROE = Net Income ÷ Average equity
= ($101,900 - $8,500) ÷ (($340,000 + 356,000 - $8,500) ÷ 2)
= $93,400 ÷ $343,750
= 0.27
Debt Ratio = Total debt ÷ Average Assets
= $217,000 ÷ (($550,000 + $573,000 - $8,500) ÷ 2)
= $217,000 ÷ $276,500
= 0.78
EPS = Net Income ÷ Number of Common Shares
= ($101,900 - $8,500) ÷ 22,000
= $4.25
