Question

PRIN. OF ACCT 1&TT (ACCT 2101 BACK The following information pertains to Pina Colada Corp.. Assume that all balance sheet amounts represent both average and ending balance figures Assume that all sales wee on credt CALOSATORE Assets Cash and short-term investments $ 48000 Accounts receivable (net) 50000 Inventory 37000 Property, plant and equipment 215000 Total Assets $350000 Liabilities and Stockholders' Equity Current liabilities $70000 Long-term liabilities 80000 Stockholders equity-commoni 200000 Total Labilities and Stockholders' Equity $$350000 dy Income Statement Sales revenue $83000 51000 Cost of goods sold 32000 Gross profit 15000 Operating expenses $17000 Net income 8000 Number of shares of common stock $30 Market price of common stock 8 Dividends per share on common stock $42000 Cash provided by operations What is the return on assets for this company? 29% 12%

Answer 1

Answer: ROA= 5% Workings: Return on assets (ROA) (Net income / Average Total assets) x 100 $17,000 Net income Average Total Assets Return on assets (ROA) $350,000 4.86% [$17000/$350000] x 100 5% [If rounded off to zero decimal place] or