The Following Information Pertains to Ortiz Company What Is the Return on Common Stockholders' Equity for Ortiz

question 54

Multiple Choice

The following information pertains to Ortiz Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. $\begin{array}{lr}\text { Assets }\\\text { Cash and short-term investments } & \$ 45,000 \\\text { Accounts receivable (net) } & 25,000 \\\text { Inventory } & 20,000 \\\text { Property, plant and equipment } & 270,000 \\\quad \text { Total Assets } & \$ 360,000\\\text { Liabilities and Stockholders' Equity }\\\text { Current liabilities } & \$ 50,000 \\\text { Long-term liabilities } & 90,000 \\\text { Stockholders' equity—common } & 220,000 \\\text { Total Liabilities and Stockholders' Equity } & \$ 360,000\end{array}$ $\begin{array}{lr}\text { Income Statement }\\\text { Sales } & \$ 150,000 \\\text { Cost of goods sold } & 66,000 \\\text { Gross profit } & 84,000 \\\text { Operating expenses } & \underline{29,000} \\ \text { Net income } & \$ 55,000\\\\\text { Number of shares of common stock } & 6,000 \\\text { Market price of common stock } & \$ 20 \\\text { Dividends per share } & .50\end{array}$ What is the return on common stockholders' equity for Ortiz?

• A) 25%
• B) 50%
• C) 12.5%
• D) 15.3%

---

Definitions:

Line Segments

A line segment is a part of a line that is bounded by two distinct end points, and contains every point on the line between its endpoints.

Points

Locations in space defined by their coordinates on a graph or geometric context.

Ordered Pairs

Pairs of elements taken from two sets, typically representing the coordinates of points in a coordinate system.

Equation

A mathematical statement that uses an equals sign to express that two expressions have the same value.