An Appliance Store Has Total Assets of $2,800,000,accounts Receivable of $900,000,accounts

question 64

Multiple Choice

An appliance store has total assets of $2,800,000,accounts receivable of $900,000,accounts payable of $700,000,inventory valued at $1,500,000,and total liabilities of $2,500,000.In 1999,its net sales were $2,100,000,and its net profit equalled $42,000.Calculate the store's return on assets.

• A) 1.5 percent
• B) 2.8 percent
• C) 7.5 percent
• D) 71.4 percent
• E) 75 percent

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Definitions:

Investment Balance

The total value of all investments held by an individual or entity at a given time, including stocks, bonds, and other securities.

Equity Method

An accounting technique used to record investments in other companies when the investing company has significant influence but does not control the investee.

Total Excess Amortization

Refers to the amount of amortization that exceeds the net carrying value of the intangible asset being amortized.

Fair-Value Allocations

The process of assigning fair values to different assets and liabilities when a company is acquired, as part of the purchase price allocation.