Zeman Company Has the Following Data $\begin{array} { l l l l } \text { Operating Profit } &&&& \$ 125 & \$ 110 & \$ 104 \\\text { Net Income } &&&& \$ 4 & \$56 & \$52\end{array}$

question 67

Multiple Choice

Zeman Company has the following data: $\begin{array}{llll}&2X13&2X12&2X11\\\text { Sales (all credit sales) } & \$ 800 & \$ 740 & \$ 675 \\\text { Less Cost of Goods Sold } & \underline{525} & \underline{490} &450\\\text { Gross Profit }& \$ 275 &\$ 250 &\$ 225\\\end{array}$ $\begin{array} { l l l l } \text { Operating Profit } &&&& \$ 125 & \$ 110 & \$ 104 \\\text { Net Income } &&&& \$ 4 & \$56 & \$52\end{array}$
What is the return on sales for Zeman Company in 2X13? Has the return on sales improved or not improved since 2X12?

• A)8.0%,improved
• B)8.0%,not improved
• C)14.4%,improved
• D)34.4%,improved
• E)34.4%,not improved

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Definitions:

Required Rate

The minimum return that investors expect to earn when they invest in a project, often used as the discount rate in capital budgeting.

Straight-line Depreciation

A method for dispersing the cost of a physical asset across its useful life in even annual allocations.

Discounted Payback

A capital budgeting method used to determine the profitability of an investment by calculating the time it takes for the present value of cash flows to cover the initial investment cost.

Annual Cash Flows

The total amount of money being transferred in and out of a business, considered on a yearly basis.