Selected Data from the Carmen Company at Year End Are

question 168

Essay

Selected data from the Carmen Company at year end are presented below:
Total assets
$2,000,000
Average total assets
2,200,000
Net income
250,000
Sales
1,300,000
Average common stockholders' equity
1,000,000
Net cash provided by operating activities
275,000
Shares of common stock outstanding
10,000
Calculate: a) ratio of sales to assets; b) rate earned on total assets; c) rate earned on common stockholders' equity and d) earnings per share on common stock. Assume the company had no preferred stock or interest expense. Round percentage values to one decimal place and dollar values to zero decimal place.

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of operation increases.

Herfindahl Index

A measure of market concentration, calculated as the sum of the squares of the market shares of all firms within the industry.

Market Power

The ability of a firm or group of firms to manipulate the price or quantity of goods and services in the market, typically by restricting supply to influence prices to their advantage.

Industry

The organized economic activity related to the production, processing, and marketing of goods and services.