QUESTION 12 The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets Cash and short-term investments $ 40,000 Accounts receivable (net) 30,000 Inventory 25,000 Property, plant, and equipment 215,000 Total assets $310,000 Liabilities and Stockholders’ Equity Current liabilities $ 60,000 Long-term liabilities 95,000 Stockholders’ equity—Common 155,000 Total liabilities and stockholders’ equity $310,000 Income Statement Sales $90,000 Cost of goods sold 45,000 Gross margin $45,000 Operating expenses 20,000 Net income $25,000 Number of shares of common stock 6,000 Market price of common stock $40 Dividends per share $1.00 Cash provided by operations $40,000 What is the return on total assets for this company? a. 8.1% b. 6.8% c. 16.1% d. 10.5%

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 4PA: Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall...

See similar textbooks

QUESTION 12

The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.

Assets

Cash and short-term investments
$ 40,000

Accounts receivable (net)
30,000

Inventory
25,000

Property, plant, and equipment
  215,000

Total assets
$310,000

Liabilities and Stockholders’ Equity

Current liabilities
$ 60,000

Long-term liabilities
95,000

Stockholders’ equity—Common
  155,000

Total liabilities and stockholders’ equity
$310,000

Income Statement

Sales
$90,000

Cost of goods sold
45,000

Gross margin
$45,000

Operating expenses
20,000

Net income
$25,000

Number of shares of common stock
6,000

Market price of common stock
$40

Dividends per share
$1.00

Cash provided by operations
$40,000

What is the return on total assets for this company?

a.
8.1%

b.
6.8%

c.
16.1%

d.
10.5%

Expert Solution

Trending now

This is a popular solution!

Learn your way

Includes step-by-step video

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions