The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.

\begin{array}{lr}\text { Assets }\\\text { Cash and short-term investments } & \$ 40,000 \\\text { Accounts receivable (net) } & 30,000 \\\text { Inventory } & 25,000 \\\text { Property, plant and equipment } & 215,000 \\\quad \text { Total Assets } & \$ 310,000\end{array}

\begin{array}{lr}\text { Liabilities and Stockholders' Equity }\\\text { Current liabilities } & \$ 60,000 \\\text { Long-term liabilities } & 75,000 \\\text { Stockholders' equity—common } & 175,000 \\\quad \text { Total Liabilities and Stockholders' Equity } & \$ 310,000 \\\end{array}

\begin{array}{lr}\text { Income Statement }\\\text { Sales } & \$ 130,000 \\\text { Cost of goods sold } & 45,000 \\\text { Gross profit } & 85,000 \\\text { Operating expenses } & 25,000 \\\quad \text { Net income } & \underline{\$ 60,000} \\\\\text { Number of shares of common stock } & 5,000 \\\text { Market price of common stock } & \$ 22 \\\text { Dividends per share } & 1.00\end{array}

What is the profit margin for Rural?
A) 27.8%
B) 70.6%
C) 65.4%
D) 46.2%

Stellar Inc

Multiple Choice

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