Review of the fiNancial Statements Revealed the Following for Petrolis

question 119

Multiple Choice

Review of the financial statements revealed the following for Petrolis Sales 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. When preparing common size financial statements interest expense would be shown as

• A) 9.4%
• B) 8.4%
• C) 5.2%
• D) 10%

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Definitions:

Market Rate of Interest

The prevailing rate of interest observed in the marketplace for securities of similar risk and maturity profiles.

Bond Selling For

Bond Selling For indicates the current market price at which a bond is being traded, which can be at a discount, at par, or at a premium relative to its face value.

Coupon

A payment to the holder of a bond made periodically until the bond matures, typically representing interest on the bond.

Annually

Refers to events or phenomena that occur once every year.