Use the Following Information for Questions

question 67

Multiple Choice

Use the following information for questions:
Review of the financial statements revealed the following for Sonoma Inc.: Sales $1,250,000, Net income $37,500, Total assets $650,000, Long-term debt $750,000, Interest expense $65,000 and Cost of goods sold $775,000.
-What is the Sonoma's gross profit margin closest to:

• A)3%
• B)38%
• C)52%
• D)62%

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Definitions:

Donee Beneficiary

A third party who benefits from a contract made between two other parties, particularly where the contract's intent is to gift something to the beneficiary.

Creditor Beneficiary

A third party that benefits from a contract in which one party promises to pay a debt owed to the third party by the other contract party.

Promisee

The party in a contract who is promised something by another party (the promisor) and stands to benefit from the fulfillment of that promise.

Novation

The act of replacing one obligation with another, which involves a new party or a new agreement and extinguishes the original contract.