Calculate the Total Value of Owner's Equity of a Business

question 42

Multiple Choice

Calculate the total value of owner's equity of a business if it realizes a net profit of $240 million at a return of 30%.

• A)$8 billion
• B)$800 million
• C)$720 million
• D)$7.2 billion
• E)$2.4 billion

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Definitions:

Perpetual Inventory System

An inventory management system that keeps continuous, real-time records of goods as they are received and sold.

FIFO

First-In, First-Out method of inventory valuation where older stock is sold first.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, not yet sold.

Inventory Valuation

The process of determining the value of a company's inventory, taking into account costs of acquiring, producing, and storing the inventory.