Return on Assets The following financial data is from Hi-Tech Instruments' financial statements (thousands of dollars, except earnings per share.) 2016 Sales revenue $210,000 Cost of goods sold 125,000 Net income 8,800 Dividends 3,100 Earnings per share 4.40 Hi-Tech Instruments, Inc. Balance Sheet (Thousands of Dollars) Dec. 31, 2016 Dec. 31, 2015 Assets Cash $19,300 $18,000 Accounts receivable (net) 46,000 41,000 Inventory 39,500 43,700 Total current assets 104,800 102,700 Plant assets (net) 52,600 50,500 Other assets 15,600 13,800 Total assets 173,000 $167,000 Liabilities and Stockholders' Equity Notes payable-banks $6,000 $6,000 Accounts payable 22,500 18,700 Accrued liabilities 16,500 21,000 Total current liabilities 45,000 45,700 9% Bonds payable 41,000 40,000 Total liabilities 86,000 85,700 Common stock, $25 par value (2,000,000 shares) 50,000 50,000 Retained earnings 37,000 31,300 Total stockholders' equity 87,000 81,300 Total liabilities and stockholders' equity 173,000 $167,000 Industry Average Ratios for Competitors Quick ratio 1.3 Current ratio 2.4 Accounts receivable turnover 5.9 times Inventory turnover 3.5 times Debt-to-equity ratio 0.73 Gross profit percentage 42.8 percent Return on sales 4.5 percent Return on assets 7.6 percent Calculate the company's return on assets for 2016. Round answer to one decimal place. (Ex.: 0.2345 = 23.5%) Answer %

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 17E

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Return on Assets
The following financial data is from Hi-Tech Instruments' financial statements (thousands of dollars, except earnings per share.)

2016
Sales revenue	$210,000
Cost of goods sold	125,000
Net income	8,800
Dividends	3,100
Earnings per share	4.40

Hi-Tech Instruments, Inc. Balance Sheet
(Thousands of Dollars)	Dec. 31, 2016	Dec. 31, 2015
Assets
Cash	$19,300	$18,000
Accounts receivable (net)	46,000	41,000
Inventory	39,500	43,700
Total current assets	104,800	102,700
Plant assets (net)	52,600	50,500
Other assets	15,600	13,800
Total assets	173,000	$167,000
Liabilities and Stockholders' Equity
Notes payable-banks	$6,000	$6,000
Accounts payable	22,500	18,700
Accrued liabilities	16,500	21,000
Total current liabilities	45,000	45,700
9% Bonds payable	41,000	40,000
Total liabilities	86,000	85,700
Common stock, $25 par value (2,000,000 shares)	50,000	50,000
Retained earnings	37,000	31,300
Total stockholders' equity	87,000	81,300
Total liabilities and stockholders' equity	173,000	$167,000

Industry Average Ratios for Competitors
Quick ratio	1.3
Current ratio	2.4
Accounts receivable turnover	5.9 times
Inventory turnover	3.5 times
Debt-to-equity ratio	0.73
Gross profit percentage	42.8 percent
Return on sales	4.5 percent
Return on assets	7.6 percent

Calculate the company's return on assets for 2016.

Round answer to one decimal place. (Ex.: 0.2345 = 23.5%)

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