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

question 99

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. $\begin{array}{lr}\text { Assets }\\\text { Cash and short-term investments } & \$ 45,000 \\\text { Accounts receivable (net) } & 25,000 \\\text { Inventory } & 20,000 \\\text { Property, plant and equipment } & 270,000 \\\quad \text { Total Assets } & \$ 360,000\\\\\text { Liabilities and Stockholders' Equity }\\\text { Current liabilities } & \$ 50,000 \\\text { Long-term liabilities } & 90,000 \\\text { Stockholders' equity-common } & 220,000 \\\quad \text { Total Liabilities and Stockholders' Equity } & \$ 360,000 \\\\\text { Income Statement }\\\text { Sales } & \$ 150,000 \\\text { Cost of goods sold } & 66,000 \\\text { Gross profit } & 84,000 \\\text { Operating expenses } & 29,000 \\\quad \text { Net income } & \$ 55,000 \\\\\text { Number of shares of common stock } & 6,000 \\\text { Market price of common stock } & \$ 20 \\\text { Dividends per share } & .50\end{array}$ What is the return on common stockholders' equity for Ortiz?

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

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Definitions:

Marginal Revenue

The increased revenue a company achieves from the sale of an additional good or service unit.

Purely Competitive

This describes a market structure where many firms sell identical products, and no single seller can influence the market price.

Purely Competitive

A purely competitive market is characterized by numerous sellers and buyers engaging in the exchange of homogenous goods or services, with no single entity able to influence market prices.

Market Price

The current market rate at which services or goods are offered for sale or purchase.