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

question 111

Multiple Choice

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.
Assets
$\begin{array}{lr}\text { Cash and short-term investments } & \$ 30,000 \\\text { Accounts receivable (net) } & 20,000 \\\text { Inventory } & 15,000 \\\text { Property, plant, and equipment } & 185,000 \\\text { Total assets } & \$ 250,000\end{array}$ Liabilities and Stockholders' Equity
$\begin{array}{lr}\text { Current liabilities } & \$ 45,000 \\\text { Long-term liabilities } & 70,000 \\\text { Common stock } & 80,000 \\\text { Retained earnings } & 55,000 \\\text { Total liabilities and stockhol ders' equity } & \$ 250,000\end{array}$ Income Statement
$\begin{array}{lr}\text { Sales } & \$ 85,000 \\\text { Cost of goods sold } & 45,000 \\\text { Gross margin } & \$ 40,000 \\\text { Operating expenses } & (15,000) \\\text { Interest expense } & (5,000) \\\text { Net income } & \$ 20,000\end{array}$
$$\begin{array} { l r } \text { Number of shares of common stock outstanding } & 6,000 \\\text { Market price of common stock } & \$ 20 \\\text { Total dividends paid } & \$ 9,000 \\\text { Cash provided by operations } & \$ 30,000\end{array}$$
-What is the dividend yield for Diane Company?

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Definitions:

Competitive Market

A market structure characterized by many buyers and sellers, where no single entity can affect the market price significantly.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, factor, or input.

Total Product

The overall quantity of output that a firm produces, usually within a given period, considering all factors of production.

Complementary Resources

Assets or inputs that enhance the value or effectiveness when used in conjunction with another resource.