Following Are the Financial Statements for Starman Corporation for the Year

question 160

Multiple Choice

Following are the financial statements for Starman Corporation for the year ended December 31, 20xx. Assume that all balance sheet amounts represent both average and ending figures.
$\begin{array}{|l|}\hline \text { Starman Corporation } \\\hline \text { Balance Sheet } \\\hline \text { December } 31,20 x x \\\hline \text { Assets }\\\hline\end{array}$

$\begin{array}{|l|l|}\hline \text { Cash } & \$ 20,000 \\\hline \text { Marketable securities } & 30,000 \\\hline \text { Accounts receivable } & 50,000 \\\hline \text { Inventory } & 100,000 \\\hline \text { Long-term receivables } & 35,000 \\\hline \text { Property, plant, and equipment } & 65,000 \\\hline \text { Total assets } & \$ 300,000 \\\hline\end{array}$

$\begin{array}{l}\hline \begin{array}{|l|l|}\text { Liabilities and Stockholders' Equity }\\\hline \text { Current liabilities } & \$ 100,000 \\\hline \text { Long-term liabilities } & 60,000 \\\hline \text { Stockholders' equity } & 140,000 \\\hline \text { Total liabilities and stockholders' equity } & \$ 300,000 \\\hline\end{array}\end{array}$

$\begin{array}{|l|}\hline \text { Starman Corporation } \\\hline \text { Income Statement } \\\hline \text { For the Year Ended December } 31,20 \mathrm{xx} \\\hline\end{array}$

$\begin{array}{|l|r|}\hline \text { Net sales } & \$ 400,000 \\\hline \text { Cost of goods sold } & 240,000 \\\hline \text { Gross margin } & \$ 160,000 \\\hline \text { Operating expenses } & 40,000 \\\hline \text { Income before income taxes } & \$ 120,000 \\\hline \text { Income taxes expense } & 30,000 \\\hline \text { Net income } & \$ 90,000 \\\hline\end{array}$
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What is the profit margin for this corporation? Round your answer to one decimal place.

• A) 22.5 percent
• B) 30.0 percent
• C) 40.0 percent
• D) 53.3 percent

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Definitions:

Certificate of Occupancy

An official document issued by a local government agency or building department certifying a building's compliance with applicable building codes and other laws, indicating it is in a condition suitable for occupancy.

Implied-in-Law Condition

A requirement understood within legal agreements or contracts, not explicitly stated but legally binding.

Concurrent Conditions

Circumstances or events that occur at the same time or under the same conditions, often in legal or contract terms.

Mutual Duties

Obligations or responsibilities that are shared reciprocally between parties in a contract or agreement.