The Following Financial Statement Information Is Available for Penn Corporation

question 102

Multiple Choice

The following financial statement information is available for Penn Corporation: $\begin{array}{lrr}&2017&2016\\\text { Stockholders' equity - common } & \$ 350,000 & \$ 270,000 \\\text { Net sales } & 784,000 & 697,000 \\\text { Cost of goods sold } & 406,000 & 377,000 \\\text { Net income } & 115,000 & 80,000 \\\text { Inc tax expense } & 48,000 & 29,000 \\\text { Interest expense } & 14,000 & 14,000\\\text { Dividends paid to preferred }\\\text { stockholders }&24,000&20,000\\\text { Dividends paid to common }\\\text { stockholders }&15,000&10,000\end{array}$ The return on common stockholders' equity for 2017 is

• A) 21.7%.
• B) 32.9%.
• C) 28.6%.
• D) 29.4%.

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Definitions:

Fiscal Year

A 12-month period that a company uses for accounting purposes and preparing financial statements.

Discounted Note

A promissory note that is issued at a price lower than its face value and repaid at its face value at maturity.

Cash Proceeds

The total amount of cash received from transactions, often relating to the sale of assets or products.

Discounted Note

A financial instrument involving a loan document that has been reduced from its face value to reflect current market interest rates.