Lisa, Inc.

Statement of Financial Position

December 31, 2010

(in thousands)

                                               2010    2009

Assets   

Current assets:     

 Cash                                           $30     $25

 Trading securities                                20     15

 Accounts receivable (net)                        45     30

 Inventories (at lower of cost of market)          60     50

 Prepaid items                                    15     20  

          Total Current Assets                  $170   $140

Long-term assets:   

  Long-term investments:     

    Available-for-sale investments               $ 25    $ 20

  Property, plant & equipment:     

    Land (at cost)                                 75      75

    Building (net)                                  80      90

    Equipment (net)                               95     100

  Intangible assets:     

     Patents (net)                                  35     17

    Goodwill (net)                                  20      13

          Total Long-Term Assets                  $330   $315

          Total Assets                             $500    $455

Liabilities and Equity    

Current liabilities:      

  Notes payable                                   $ 23    $ 12

  Accounts payable                                 47      28

  Accrued interest                                 $15     $15

          Total current liabilities                   $85     $55

Long-term liabilities:      

Long-term Notes payable 10% due 12/31/2012   $ 10    $10

  Bonds payable 12% due 12/31/2015              15     15

          Total long-term debt                     $ 25    $25

          Total liabilities                           $110    $80

Shareholders' Equity      

  Preferred stock - 5% cumulative, $100 par,

nonparticipating    authorized, issued and

 outstanding, 1,000 shares                       $100     $100

Common stock - $10 par 20,000 shares

authorized, 15,000  shares issued and

outstanding                                          150    150

  Additional paid-in capital - common                 75     75

  Retained earnings                                   65     50

          Total Equity                               $390   $375

          Total Liabilities & Equity                   $500   $455

Assuming that Lisa Inc.'s net income for 2010 was $35,000 and there were no preferred stock dividends in arrears, Lisa's return on common equity for 2010 was

A. 12.4%

B. 10.6%

C. 10.9%

D. 7.8%