The following information pertains to Marigold Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.Assets Cash and short-term investments $ 40,000Accounts receivable (net) 30,000Inventory 25,000Property, plant and equipment 215,000Total Assets $310,000Liabilities and Stockholders' Equity Current liabilities 60,000Long-term liabilities 95,000Stockholders' equity-common 155,000Total Liabilities and stockholders' equity $310,000Income Statement Sales $ 90,000Cost of goods sold 45,000Gross margin 45,000Operating expenses 20,000Net income $ 25,000Number of shares of common stock 6,000000Market price of common stock $40Dividends per share 1.00Cash provided by operations $40,000What is the rate earned on total assets for this company?A. 8.1%B. 6.8%C. 10.5%D. 16.1%

Question

01-09-2020
Business

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The following information pertains to Marigold Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.Assets Cash and short-term investments $ 40,000Accounts receivable (net) 30,000Inventory 25,000Property, plant and equipment 215,000Total Assets $310,000Liabilities and Stockholders' Equity Current liabilities 60,000Long-term liabilities 95,000Stockholders' equity-common 155,000Total Liabilities and stockholders' equity $310,000Income Statement Sales $ 90,000Cost of goods sold 45,000Gross margin 45,000Operating expenses 20,000Net income $ 25,000Number of shares of common stock 6,000000Market price of common stock $40Dividends per share 1.00Cash provided by operations $40,000What is the rate earned on total assets for this company?A. 8.1%B. 6.8%C. 10.5%D. 16.1%

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anthougo anthougo · Answer 1 · 2020-09-02T03:30:58+02:00

Answer:

Marigold Company

The rate earned on total assets for Marigold = Net Income/Total Assets * 100

= $ 25,000/$310,000 * 100

= 8.06%

Explanation:

a) Data:

Assets

Cash and short-term investments $ 40,000

Accounts receivable (net) 30,000

Inventory 25,000

Property, plant and equipment 215,000

Total Assets $310,000

Liabilities and Stockholders' Equity

Current liabilities 60,000

Long-term liabilities 95,000

Stockholders' equity-common 155,000

Total Liabilities and stockholders' equity $310,000

Income Statement

Sales $ 90,000

Cost of goods sold 45,000

Gross margin 45,000

Operating expenses 20,000

Net income $ 25,000

Number of shares of common stock 6,000000

Market price of common stock $40

Dividends per share 1.00

Cash provided by operations $40,000

b) Marigold's Return on assets (ROA) indicates how profitable it is relative to its total assets. Its ROA gives a manager, investor, or analyst an idea as to how efficient Marigold's management is at using the company's assets to generate earnings. As a percentage, Marigold's Return on assets is 8.06%.