The Following Information Pertains to Des Moines Company Invested Capital Is _____ If It Is Defined as Total

question 165

Multiple Choice

The following information pertains to Des Moines Company: $\begin{array}{llll}\text { Current assets } & \$ 100,000 & \text { Current liabilities } & \$ 175,000\\\text { Property, plant and } \\\\\text { equipment } & 150,000 & \text { Long-term liabilities } & 100,000 \\\text { Construction in progress } & 50,000 & \text { Stockholders' equity } & 25,000\\\text { Total assets }&\$300,000&\text { Total assets }&\$300,000\end{array}$ Invested capital is _____ if it is defined as total assets less current liabilities.

• A)$300,000
• B)$250,000
• C)$125,000
• D)$100,000

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Definitions:

Net Income

The total amount of profit a company earns after taxes and all expenses have been deducted from revenues, commonly referred to as the bottom line.

Sustainable Growth Rate

The highest speed at which a business can expand its profits without having to raise its debt levels or issue more equity.

Retention Ratio

The percentage of net income that is retained to be reinvested in the business, rather than being paid out as dividends.

Dividend Payout Ratio

The percentage of earnings paid to shareholders in dividends, calculated by dividing the total amount of dividends by the net income of the company.