Exhibit 10 The Zeco Company's Industry Averages Are as Follows:
Net Profit

question 19

Multiple Choice

Exhibit 10.8
Use the Information Below for the Following Problem(S)
Zeco Company has the following financial statements for year ending 12/31/2008.
$\begin{array}{c}\begin{array}{lll}Sales\\\text{Cost of Goods Sold}\\\text{Gross Profit}\\\text{Depreciation}\\\text{Operating Expenses}\\\text{Administration Exp.}\\\text{Operating Profit 15,000}\\\text{Interest Expense}\\\\\text{Profit Before Taxes}\\Taxes\\\\\text{Net Income}\\Dividends\\\end{array}\begin{array}{lll}&&&\end{array}\begin{array}{lll}1,000,000\\750,000 \\\hline 250,000 \\100,000 \\70,000 \\65,000\\\\\\8,000\\\hline7,000\\\\2,800\\\hline4,200\\3,200\end{array}\end{array}$
$\begin{array}{c}\begin{array}{lll}\text{Assets}\\\text{Cash}\\\text{Accounts Receivable}\\\text{Inventory}\\\text{Total Current Assets}\\\text{Net Fixed Assets}\\\text{Total Assets}\\\\\\\end{array}\begin{array}{lll}\\50,000 \\250,000 \\325,000 \\\hline 825,000 \\450,000 \\\hline 1,275,000\\\\\\\end{array}\begin{array}{lll}\text{Liabilities}\\\text{Notes Payable}\\\text{Accounts Payable}\\\text{Total Current Liab.}\\\text{Long Term Debt}\\\text{Common Stock}\\\text{Retained Earnings}\\\text{Total Liab. \& Earnings}\\\\\end{array}\begin{array}{lll}250,000 \\350,000 \\\hline 800,000 \\225,000 \\200,000 \\50,000 \\\hline 1,275,000\end{array}\end{array}$
The Zeco Company's industry averages are as follows:
Net Profit Margin = 4.5%; Total Asset Turnover = 0.8; Total Assets/Equity = 1.5
-Refer to Exhibit 10.8.Based on this information what are the strengths and concerns of Zeco Company?

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Definitions:

Excess Demand

A situation where the quantity demanded of a product exceeds the quantity supplied at a given price, often leading to price increases.

Rationing Mechanism

A system or method used to allocate scarce goods, services, or resources among people with competing demands.

Market Economies

Economic systems where decisions on production, investment, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.

Price

The fund amount deemed necessary, expected, or allocated for a service or good.