The Following Information Pertains to Cheng Company $\text { Equity and Liabilities }$

question 32

Multiple Choice

The following information pertains to Cheng Company.Assume that all statement of financial position amounts represent both average and ending balance figures.Assume that all sales were on credit.All amounts are in thousands except per share items. Assets
$\begin{array}{lr}\text { Property, plant and equipment } & ¥ 215,000 \\\text { Inventory } & 25,000 \\\text { Accounts receivable (net) } & 30,000 \\\text { Cash and short-term investments } & 40,000 \\\hline \text { Total Assets } & ¥ 310,000\end{array}$

$\text { Equity and Liabilities }$
$\begin{array}{lr}\text { Shareholders' equity—ordinary } & ¥ 175,000 \\\text { Non-current liabilities } & 75,000 \\\text { Current liabilities } & 60,000 \\\quad \text { Total Equity and Liabilities } & ¥ 310,000\end{array}$

$\text { Income Statement }$
$\begin{array}{lr}\text { Sales } & ¥ 90,000 \\\text { Cost of goods sold } & 45,000 \\\text { Gross margin } & 45,000 \\\text { Operating expenses } & 25,000 \\\text { Net income } & ¥ 20,000\\\\\text { Number of ordinary shares } & 5,000 \\\text { Market price of ordinary shares } & \$ 22 \\\text { Dividends per share } & 1.00\end{array}$

What is the profit margin for Cheng?

• A)50.0%
• B)16.7%
• C)44.4%
• D)22.2%

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