The following information pertains to Dallas 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 280,000 Total assets $375,000 Liabilities and Stockholders' Equity Current liabilities $60,000 Long-term liabilities 95,000 Stockholders' equity—Common 220,000 Total liabilities and stockholders' equity $375,000 Income Statement Sales $90,000 Cost of goods sold 45,000 Gross margin $45,000 Operating expenses 15,000 Net income $30,000 Number of shares of common stock 6,000 Market price of common stock $20 Dividends per share $1.00 Cash provided by operations $40,000 What is the return on stockholders' equity? a.40.9% b.13.6% c.7.3% d.20.5%

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

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

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The following information pertains to Dallas 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		280,000
Total assets	$375,000

Liabilities and Stockholders' Equity

Current liabilities		$60,000
Long-term liabilities		95,000
Stockholders' equity—Common		220,000
Total liabilities and stockholders' equity	$375,000

Income Statement

Sales		$90,000
Cost of goods sold		45,000
Gross margin		$45,000
Operating expenses		15,000
Net income	$30,000

Number of shares of common stock		6,000
Market price of common stock		$20
Dividends per share		$1.00
Cash provided by operations		$40,000

What is the return on stockholders' equity?

a.40.9%

b.13.6%

c.7.3%

d.20.5%

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