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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Definitions:

Sustainability Focus

An approach centered on ecological and social responsibility in business practices to ensure long-term environmental health and viability.

Carbon Tax System

An environmental policy instrument that places a tax on carbon dioxide emissions, aiming to reduce the impact of climate change by encouraging reductions in greenhouse gas emissions.

Price of Emissions

Concerns the cost associated with releasing pollutants into the environment, often factored into the production costs for companies under environmental regulations.

Differential Pricing

A pricing strategy where a company charges different prices for the same product or service based on various factors like market segment, purchase volume, or buying behavior.