The Following Information Pertains to Cheng Company What Is the Profit Margin for Cheng?
A) 50

question 3

Multiple Choice

The following information pertains to Cheng Company. Assume that all statement of financial position amounts represent both average and ending balance figures. Assume that all sales were on credit. All amounts are in thousands except per share items. $\begin{array}{lr}\text { Assets }\\\text { Property, plant and equipment } &¥ 215,000 \\\text { Inventory } & 25,000 \\\text { Accounts receivable (net) } & 30,000 \\\text { Cash and short-term investments } & 40,000 \\\quad \text { Total Assets } & ¥ 310,000\\\\\text { Equity and Liabilities }\\\text { Shareholders' equity-ordinary } &¥ 155,000 \\\text { Non-current liabilities } & 95,000 \\\text { Current liabilities } & 60,000 \\\quad \text { Total Equity and Liabilities } &¥ 310,000\\\\\text { Income Statement }\\\text { Sales revenue } & ¥ 90,000 \\\text { Cost of goods sold } & 45,000 \\\text { Gross margin } & 45,000 \\\text { Operating expenses } & 20,000 \\\quad \text { Net income } &¥25,000\\\\\text { Number of ordinary shares } & 6,000 \\\text { Market price of ordinary shares } & \$ 20 \\\text { Dividends per share } & 1.00\end{array}$ What is the profit margin for Cheng?

• A) 50.0%
• B) 55.6%
• C) 23.5%
• D) 27.8%

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Definitions:

Dependent Variables

Variables in an experiment or model that are expected to change as a result of changes in the independent variables.

Multicollinearity

A situation in multiple regression where one predictor variable in the model can be linearly predicted from the others with a substantial degree of accuracy.

Multicollinearity

A statistical phenomenon in which two or more predictor variables in a multiple regression model are highly correlated.

Independent Variables

Factors or conditions that are manipulated or changed in an experiment to observe their effect on dependent variables without being influenced by them.