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Question
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 | |
| Merchandise 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 merchandise sold | 45,000 | |
| Gross profit | $45,000 | |
| Operating expenses | (16,200) | |
| Interest expense | (3,800) | |
| Net income | $25,000 | |
| Number of shares of common stock | 6,000 | |
| Market price of common stock | $40.00 | |
| Dividends per share | $1.00 | |
| Net cash flows from operating activities | $40,000 |
What is the return on total assets for Newman Company (rounded to one decimal place)?
a. 9.3%
b. 6.8%
c. 10.5%
d. 16.1%
Answer
This answer is hidden. It contains 1 characters.
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