Question

The following information pertains to Bramble Company. Assume that all balance sheet amounts represent both average...

The following information pertains to Bramble 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 $ 41000
Accounts receivable (net) 25000
Inventory 30000
Property, plant and equipment (net) 224000
            Total Assets

$320000
Liabilities and Stockholders’ Equity
Current liabilities $ 58000
Long-term liabilities 89000
Stockholders’ equity—common 173000
            Total Liabilities and Stockholders’ Equity

$320000
Income Statement
Sales (net) $ 85000
Cost of goods sold    41000
Gross profit 44000
Operating expenses    20000
            Net income

$ 24000
Number of shares of common stock 2000
Market price of common stock $20
Dividends per share 0.90


What is the return on assets for Bramble?

13.75%
7.81%
7.50%
15.69%
Business   Accounting   
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Homework Answers

Answer #1

The answer is the third option : 7.50%

Return on Assets = Net Income
Average Total Assets

Given,
Net Income                     = $ 24,000
Average Total Assets = $ 320,000
Return on Assets          =            24,000 = 7.50%
       320,000
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