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 $ 40,000Accounts receivable (net) 30,000Inventory 25,000Property, plant, and equipment 280,000Total assets$375,000 Liabilities and Stockholders’ Equity Current liabilities $ 60,000Long-term liabilities 95,000Common stock, $20 par 120,000 Retained earnings 100,000Total liabilities and stockholders’ equity$375,000 Income Statement Sales $90,000Cost of goods sold 45,000Gross margin $45,000Operating expenses 15,000Net income$30,000 Number of shares of common stock 6,000Market price of common stock $20Dividends per share $1.00Cash provided by operations $40,000What is the return on stockholders’ equity? a.13.6% b.7.3% c.40.9% d.20.5%

Ratio analysis used identify the business performance of the company. It is used to measure…

Answered: What is the return on stockholders’…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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
Common stock, $20 par		120,000
Retained earnings		100,000
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.	13.6%
	b.	7.3%
	c.	40.9%
	d.	20.5%

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