Danny Corporation's Total Current Assets Are Valued at $233,000 and Are

question 18

Multiple Choice

Danny Corporation's total current assets are valued at $233,000 and are comprised of cash, accounts receivable and inventory. Determine the value of the cash account given the following information: sales = $225,000; cost of goods sold = $135,000; accounts receivable turnover = 3 times; inventory turnover = 1.5 times.

• A) $68,000
• B) $66,000
• C) $64,000
• D) $62,000
• E) $60,000

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Definitions:

Gross Margin

The difference between revenue and the cost of goods sold, which indicates the profitability before administrative, sales, and other expenses.

Financial Leverage

A difference between the rate of return on assets and the rate paid to creditors.

Issuing Common Stock

The process by which a company sells new shares of its common stock to investors, thereby raising equity capital.

Return On Equity

A measure of financial performance calculated by dividing net income by shareholder equity, indicating how effectively a company uses investments to generate earnings.