The Following Information Pertains to Newman Company Liabilities and Stockholders' Equity

question 106

Multiple Choice

The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets $$\begin{array} { l r } \text { Cash and short-term investments } & \$ 40,000 \\\text { Accounts receivable (net) } & 30,000 \\\text { Inventory } & 25,000 \\\text { Property, plant, and equipment } & 215,000 \\\text { Total Assets } & \$ 310,000\end{array}$$ Liabilities and Stockholders' Equity $$\begin{array} { l r } \text { Current liabilities } & \$ 60,000 \\\text { Long-term liabilities } & 95,000 \\\text { Common stock, no par } & 80,000 \\\text { Retained earnings } & 75,000 \\\text { Total liabilities and stockhol ders' equity } & \$ 310,000\end{array}$$ Income Statement $$\begin{array} { l r } \text { Sales } & \$ 90,000 \\\text { Cost of goods sold } & 45,000 \\\text { Gross margin } & \$ 45,000 \\\text { Operating expenses } & 20,000 \\\text { Net income } & \$ 25,000\end{array}$$ $$\begin{array} { l r } \text { Number of shares of common stock } & 6,000 \\\text { Market price of common stock } & \$ 40 \\\text { Dividends per share } & \$ 1.00 \\\text { Cash provided by operations } & \$ 40,000\end{array}$$

What is the return on total assets for this company?

• A) 8.1%
• B) 6.8%
• C) 10.5%
• D) 16.1%

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Definitions:

Sterile Gown

A clean, germ-free garment worn by medical staff to prevent contamination during procedures.

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A medical procedure involving an incision with instruments, performed to repair damage, remove diseased tissue, or improve bodily function.

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Techniques used to maintain a sterile environment during surgical procedures to prevent infection.

Mayo Stand

A movable stand used in medical settings, typically in surgical rooms, to hold surgical instruments and supplies.