Question

Multiple Choice Question 174 The following information pertains to Pina Colada Corp. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments $ 48000 Accounts receivable (net) 50000 Inventory 37000 Property, plant and equipment 215000 Total Assets $350000 Liabilities and Stockholders’ Equity Current liabilities $ 70000 Long-term liabilities 80000 Stockholders’ equity—common 200000 Total Liabilities and Stockholders’ Equity $350000 Income Statement Sales revenue $83000 Cost of goods sold 51000 Gross profit 32000 Operating expenses 3650 Net income $ 28350 Number of shares of common stock 8000 Market price of common stock $30 Dividends per share on common stock 7.9 Cash provided by operations $42000 What is the return on assets for this company? 13.7% 28.7% 8.1% 12.0%

Answer 1

OPTION: 8.1%

EXPLANATION:

Return on assets = net income/average total assets

= $28350/$350000

= 8.1%