Company X has net sales revenue of $1,254,000, cost of goods sold of $784,000, and all other expenses of $306,000. The beginning balance of stockholders' equity is $565,000 and the beginning balance of fixed assets is $377,000. The ending balance of stockholders' equity is $1,000,000 and the ending balance of fixed assets is $405,000. Required: Compute the return on equity (ROE) ratio.

Which of the following statements is correct? stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns. potential conflicts between stockholders and bondholders are increased if a firm's bonds are convertible into its common stock. takeovers are most likely to be attempted if the target firm’s stock price is above its intrinsic value. one advantage of operating a business as a corporation is that stockholders can deduct their pro rata share of the taxes the firm pays, thereby eliminating the double taxation investors would face in a partnership.