The Balance Sheets at the End of Each of the First

question 81

Multiple Choice

The balance sheets at the end of each of the first two years of operations indicate the following: $\begin{array}{lrr}&2017&2018\\\text { Total current assets } & \$ 600,000 & \$ 560,000 \\\text { Total investments } & 60,000 & 40,000 \\\text { Total property, plant, and equipment } & 900,000 & 700,000 \\\text { Total current liabilities } & 125,000 & 80,000\\\text { Total long-term liabilities } & 350,000 & 250,000 \\\text { Preferred } 9 \% \text { stock, } \$ 100 \text { par } & 100,000 & 100,000 \\\text { Common stock, } \$ 10 \text { par } & 600,000 & 600,000 \\\text { Paid-in capital in excess of par-common stock } & 60,000 & 60,000 \\\text { Retained earnings } & 325,000 & 210,000\end{array}$ ? Based on the above information, if net income is $130,000 and interest expense is $40,000 for 2017, what is the return on common stockholders' equity for 2017 (round to one decimal place) ?

• A) 12.3%
• B) 17.4%
• C) 13.0%
• D) 14.0%

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Definitions:

Production

The process of creating goods or services, involving tasks such as design, raw material procurement, fabrication, assembly, and testing.

Service Provider

A company or individual that offers services to others in exchange for payment, often in sectors like telecommunications, information technology, and healthcare.

Governments

Entities responsible for governing a geographic area and its population, including making and enforcing laws, managing public resources, and providing services to citizens.

Establishing Prices

The process of determining the selling price of goods or services, taking into account factors like costs, market demand, competition, and desired profit margins.