The following information pertains to Dallas Company. Assume that all balance sh
ID: 2473963 • Letter: T
Question
The following information pertains to Dallas Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.
Assets
Cash and short-term investments
$ 40,000
Accounts receivable (net)
30,000
Inventory
25,000
Property, plant, and equipment
280,000
Total assets
$375,000
Liabilities and Stockholders’ Equity
Current liabilities
$ 60,000
Long-term liabilities
95,000
Stockholders’ equity—Common
220,000
Total liabilities and stockholders’ equity
$375,000
Income Statement
Sales
$90,000
Cost of goods sold
45,000
Gross margin
$45,000
Operating expenses
15,000
Net income
$30,000
Number of shares of common stock
6,000
Market price of common stock
$20
Dividends per share
$1.00
Cash provided by operations
$40,000
What is the rate earned on stockholders’ equity?
Cash and short-term investments
$ 40,000
Accounts receivable (net)
30,000
Inventory
25,000
Property, plant, and equipment
280,000
Total assets
$375,000
Explanation / Answer
ROE 13.64% (30000/220000)
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