Solved

Given Below Are Comparative Balance Sheets and an Income Statement

question 38

Multiple Choice

Given below are comparative balance sheets and an income statement for Claret Corporation
$\begin{array} { l } \hline \text { Claret Corporation } & \text { Claret Corporation } \\\text { Balance Sheets }-2009 & \text { Income Statement } \\&\text { For the year ended } 2009\\\begin{array}{|l|r|r|}\hline& {\text { Dec.31 }} & \text { Jan. 1 } \\\hline \text { Equipment (net) } & \$ 57,200 & \$ 66,300 \\\hline \text { Inventory } & 32,500 & 36,400 \\\hline \text { Accounts receivable } & 46,800 & 37,700 \\\hline \text { Cash } & 15,600 & 15,600 \\\hline & \$ 152,100 & \$ 156,000 \\\hline \text { Accounts payable } & 26,000 & 28,600 \\\hline & & \\\hline \text { Dividends payable } & 7,800 & 3,900 \\\hline \text { Long-term note payable } & 14,300 & 14,300 \\\hline \text { Share capital, \$5 par } & 72,800 & 72,800 \\\hline \text { Retained earnings } & 31,200 & 36,400 \\\hline & \$ 152,100 & \$ 156,000 \\\hline\end{array}&\begin{array}{|l|r|}\hline \text { Sales } & \$ 228,800 \\\hline \text { Cost of goods sold } & (137,540) \\\hline \text { Gross profit on sales } & \$ 91,260 \\\hline \text { Operating expenses } & (75,868) \\\hline \text { Operating profit } & \$ 15,392 \\\hline \begin{array}{l}\text { Interest expense and } \\\text { income taxes }\end{array} & (9,100) \\\hline \text { Profit } & \$ 6,292 \\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\end{array}\end{array}$
All sales were made on account. Cash dividends declared during the year totaled $11,492
-Refer to the above data. Claret Corporation's return on assets for 2009 rounded to the nearest tenth of a percent is:

Definitions:

Economies of Scale

Advantages in costs that companies gain by operating at larger scales, resulting in lower cost per unit as the scale expands.

Product Innovation

The process of developing new products or improving existing ones to meet changing consumer needs and preferences.

Process Innovation

The implementation of new or significantly improved production or delivery methods, enhancing efficiency or quality in the manufacturing or service sectors.

Venture Capital

Financing provided by investors to startups and small businesses with long-term growth potential.