Mars Electronics is distributor for the Global Electric Company (GEC), a large manufacturer of electrical and electronics products for consumer and institutional markets. On the next page are the semiannual financial statements of the company for the last year and a half.

a. Prepare Mars Electronics’ managerial balance sheet on June 30, 2009, December

31, 2009, and June 30, 2010.

b. What was the structure of the return on equity (ROE) of Mars Electronics for the six months ending June 30, 2009, December 31, 2009, and June 30, 2010?

c. What accounts for the changes in the firm’s ROE?

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Income Statements (in thousands) Six Months to June 30, 2009 Six Months to December 31,2009 Six Months to June 30, 2010 S10,655 $11,720 9,834 1,677 Net sales S13,851 11,671 Cost of goods sold Selling, general, and administrative 8,940 1,554 1,925 expenses Depreciation expense Interest expense Tax expense 62 2.3 S 32 76 70 26 $ 37 90 Earnings after tax S 66 S 44 Dividends Balance Sheets (in thousands) June 30, 2009 December 31, 2009 June 30, 2010 Cash Accounts receivable Inventorics Prepaid expenses Net fixed assets Total assets Short-term debt Accounts payable Accrued expenses Long-term debt Owners' equity Total liabilities and owners' equity 160 1,953 1,986 80 733 $4,912 S 50 1,450 98 800 2,514 $4,912 2,616 2,694 42 818 $6,230 S 880 1,950 114 750 2,536 S6,230 S 70 2,100 2,085 25 830 S5,110 S 50 1,650 138 700 2,572 S5,110