Condensed Financial Data Are Presented Below for the Phoenix Corporation

question 23

Multiple Choice

Condensed financial data are presented below for the Phoenix Corporation:
$\begin{array}{lrr}&2014&2013\\\text { Accounts receivable } & \$ 267,500 & \$ 230,000 \\\text { Inventory } & 312,500 & 257,500 \\\text { Total current assets } & 670,000 & 565,000 \\\text { Intangible assets } & 50,000 & 60,000 \\\text { Total assets } & 825,000 & 695,000 \\\text { Current liabilities } & 252,500 & 200,000 \\\text { Long-term liabilities } & 77,500 & 75,000 \\\text { Sales } & 1,640,000 & \\\text { Cost of goods sold } & 982,500 & \\\text { Interest expense } & 10,000 & \\\text { Income tax expense } & 77,500 & \\\text { Net income } & 127,500 & \\\text { Cash flow from operations } & 71,000 & \\\text { Cash flow from investing activities } & (6,000) & \\\text { Cash flow from financing activities } & (62,500) & \\\text { Tax rate } & 30 \% &\end{array}$
-The profit margin used to calculate return on assets for 2014 is (rounded) :

• A)7.9%
• B)8.2%
• C)8.5%
• D)16.3%

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Definitions:

Tax Cut

A reduction in the amount of taxes imposed by a government, aiming to stimulate economic growth or achieve other policy objectives.

Disposable Income

After income taxes are taken out, disposable income represents the funds available to a household or individual for saving and spending purposes.

APS

Average Propensity to Save, which is the fraction of total income that is saved by an economy or individual.

Income

The financial gain received by an individual or entity, usually in the form of wages, salaries, or returns from investments.