Financial Statements and Ratio Analysis - Firm's Profitability and Market Value The financial statements of a company are given: Income Statement (Year N + 1):
Sales 4,000,000;
Cost of goods sold 3,040,000;
Gross profit 960,000;
Selling and administrative expenses 430,000;
Operating profit 530,000;
Interest expense 160,000;
Income before tax 370,000;
Tax expense 148,000;
Net income 222,000.

Balance Sheet figures in dollars at the end of Year (N + 1) and Year N respectively: Cash: 60,000, 50,000;
Accounts receivable 550,000, 500,000;
Inventory 690,000, 620,000;
Total current assets: 1,300,000, 1,170,000;
Fixed assets 1,300,000, 1.230,000;
Total assets: 2,600,000, 2,400,000;
Accounts payable: 270,000, 250,000;
Bank Loan 580,000, 500,000;
Total current liabilities: 850,000, 750,000;
Bonds payable: 900,000, 1,000,000;
Total liabilities: 1,750,000, 1,750,000;
Common Stock (25,000 shares): 250,000, 250,000;
Retained earnings: 600,000, 400,000;
Total liabilities and Equity: 2,600,000, 2,400,000.

Note that the common shares are trading in the stock market for $100 each. The firm's return on equity ratio for Year (N + 1) is:
A. 0.1235
B. 0.0296
C. 0.2960
D. 2.2960