(The Following Information Applies to Problems 110 Through 127

question 6

Multiple Choice

(The following information applies to Problems 110 through 127.)
The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.
-What is the firm's debt ratio?

• A) 48.55%
• B) 53.95%
• C) 59.94%
• D) 66.60%
• E) 74.00%

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Definitions:

Profit Projections

Forecasts of a company's net income over a specific future period.

Tax-Deductible Expense

An expense that can be subtracted from taxable income, effectively reducing the overall tax liability.

Debt Financing

Raising capital through the borrowing of funds to be repaid with interest over time.

FIFO Method

First In, First Out, an inventory valuation method where the oldest inventory is sold first.