The following information pertains to Carlton Company. Assume that all balance s
ID: 2490273 • Letter: T
Question
The following information pertains to Carlton 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 $37,725 Accounts receivable (net) 28,293 Inventory 36,937 Property, plant and equipment 278,093 Total Assets $381,048 Liabilities and Stockholders' Equity Current liabilities $63,725 Long-term liabilities 96,630 Stockholders' equity-common 220,693 Total liabilities and stockholders' equity $381,048 Income Statement Net Sales $85,139 Cost of goods sold 34,056 Gross margin 51,083 Operating expenses 24,045 Net income from operations $27,038 Interest expense 4,257 Net income $22,781 Number of shares of common stock 6,908 Market price of common stock $28 What is the rate earned on total assets for this company? Select the correct answer. 8.5% 7.1% 3.0% 0.9% Icon Key Previous Question 18 of 20 Nextb Multiple Choice 15-057 Algorithmic Email Instructor
Explanation / Answer
The rate earned on total assets can be calculated with the use of following formula:
Rate Earned on Total Assets = (Net Income from Operations or EBIT)/Total Assets*100
________
Solution:
Using the values provided in the question, we get,
Rate Earned on Total Assets = 27,038/381,048*100 =7.1% (which is Option B)
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