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%
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%
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 4PB
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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%
|
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