Orca Industries Below Are the Two Most Recent Balance Sheets

question 27

Multiple Choice

Orca Industries Below are the two most recent balance sheets and most recent income statement for Orca Industries. The company has an effective tax rate of 35%.
$\begin{array}{llcc}\text { Balance Sheet }&2011&2010 \\ \text { Assets: } &\\ \text { Cash} &\$10,000&\$6,000\\ \text { Accounts Receivable (net) } &6,000&1,500\\ \text { Inventory } &8,000&10,000\\ \text { Long-lived assets} &12,000&11,000\\ \text { Less: Accumulated depreciation } &\underline{(4,000) }&\underline{(2,000) } \\ \text { Total assets } &\underline{\$32,000}&\underline{\$26,500}\\\\ \text { Liabilities and Stockholders' Equity: } &\\ \text {Accounts payable } &\$5,000&\$6,000\\ \text { Deferred revenues } &1,000&2,000\\ \text { Long-term note payable } &10,000&10,000\\ \text { Less: Discount on note payable} & (800) &(1,000) \\ \text {Common stock } &12,000&6,000\\ \text { Retained earnings} &\underline{4,800}&\underline{\$3,500}\\ \text {Total liabilities and stockholders' equity } &\underline{\$32,000}&\underline{\$26,500}\\\\ \text { Income Statement} &\\ \text { For the year ended December 31, 2011 } &\\ \text { Revenues} &&\$42,000\\ \text { Cost of goods sold } &&(24,000) \\ \text { Depreciation expense} &&(2,000) \\ \text { Interest expense } &&(3,000) \\ \text { Bad debt expense} &&(2,000) \\ \text { Other expense (including income taxes) }& &\underline{(9,000) }\\ \text { Net income } &&\underline{\$2,000}\\\end{array}$

-
Refer to the information for Orca Industries. Orca's asset turnover is

• A) 1.31
• B) 1
• C) 1.58
• D) 1.44

---

Definitions:

Lean

A systematic approach to identifying and eliminating waste through continuous improvement, promoting efficiency and effectiveness in processes.

Maximizing Profitability

Strategies and practices focused on increasing the difference between revenue and expenses to achieve the highest possible profit.

Minimizing Waste

refers to the practices and processes aimed at reducing the amount of waste produced by a company, enhancing efficiency and sustainability.

Improve Quality

The process of making enhancements to the standard of products, services, or processes to increase customer satisfaction and achieve better outcomes.