The following information pertains to Cheng Company. Assume that all statement of financial position amounts represent both
Question:
The following information pertains to Cheng Company. Assume that all statement of financial position amounts represent both average and ending balance figures. Assume that all sales were on credit. All amounts are in thousands except per share items.
Assets
Property, plant and equipment ¥ 215,000
Inventory 27,000
Accounts receivable (net) 30,000
Cash and short-term investments 40,500
Total Assets ¥312,500
Equity and Liabilities
Shareholders’ equity—ordinary ¥ 177,500
Non-current liabilities 75,000
Current liabilities 60,000
Total Equity and Liabilities ¥312,500
Income Statement
Sales ¥ 90,000
Cost of goods sold 40,000
Gross margin 50,000
Operating expenses 30,000
Net income ¥ 20,000
Number of ordinary shares 5,000
Market price of ordinary shares ¥20
Dividends per share 1.00
What is the return on ordinary shareholders'equity for Cheng?
a. 22.5%
b. 11.3%
c. 28.2%
d. 50.7%
Expert Answer:
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