The Balance Sheet and Income Statement Shown Below Are for Pettijohn

question 99

Multiple Choice

The balance sheet and income statement shown below are for Pettijohn 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 quick ratio?

• A) 0.49
• B) 0.61
• C) 0.73
• D) 0.87
• E) 1.05

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Definitions:

Actual Sales

This refers to the actual revenue generated from the sale of products or services, as opposed to projected sales or forecasts.

Break-even Point

The point at which total revenues equal total costs, meaning the company neither makes a profit nor incurs a loss.

Variable Costs

Costs that vary directly with the level of production or with volume of services provided.

Fixed Costs

Fixed costs are expenses that do not vary with the level of production or sales within a certain range, such as rent, salaries, and insurance.