question 45
Multiple Choice
Dana Dairy Products Key Ratio
Current Ratio Quick Ratio Average collection Period Inventory Turnover Debt Ratio Times Interest Earned Gross Profit Margin Net Profit Margin Return on total assets Return on Equity Industry Average 1.30.823 days 21.764.7%4.813.6%1.0%2.9%8.2% Actual 20011.00.7530 days 1950%5.512.0%0.5%2.0%4.0% Actual 2002
Income Statement
Dana Dairy Products
For the Year Ended December 31, 2002
Sales Revenue Less: Cost of Goods Sold Gross Profits Less: Operating Expenses Operating Profits Less: Interest Expense Net Profits Before Taxes Less: Taxes (40%) $100,00087,000−⋯$13,00011,000−⋯2,000500−⋯$1,500600
Balance Sheet
Dana Dairy Products
December 31, 2002
ASSETS
Cash Accounts Receivable Inventories Total Current Assets Gross Fixed Assets Less: Accumulated Depreciation Net Fixed Assets Total Assets Liabilities & Stockholders’ Equity Accounts Payable Accruals Total Current Liabilities Long-term Debts Total Liabilities Common Stock Retained Earnings Total Stockholders’ Equity Total Liab. & S.E. $1,0008,9004,350−−−−$14,250$35,00013,25021,750−−−−$36,000$9,0006,675−−−−$15,6754,125−−−−$19,8001,00015,200−−−−$16,200−−−−$36,000
-The average collection period for Dana Dairy Products in 2002 is
Definitions:
Invisible Hand
A metaphor introduced by Adam Smith to describe the self-regulating nature of the marketplace, where individual self-interests unintentionally benefit society.
Market System
An economic system in which decisions regarding investment, production, and distribution are based on supply and demand, with minimal government interference.
Scarcity
The limits placed on the amounts and types of goods and services available for consumption as the result of there being only limited economic resources from which to produce output; the fundamental economic constraint that creates opportunity costs and that necessitates the use of marginal analysis (cost-benefit analysis) to make optimal choices.
Mixed Capitalism
An economic system blending elements of capitalism and socialism, featuring private enterprise alongside government regulation and interventions.