Refer to the Tables Above

question 101

Multiple Choice

$\begin{array} {c } \text {MARNI COMPANY }\\ \text { Balance Sheet}\\ \text { As of December 31}\\\begin{array}{lrr}\text { ASSETS }\\\text { Cash } & \$ 50,000 \\\text { Accounts receivable } & 100,000 \\\text { Inventory } & 200,000 \\\text { Net plant and equipment } & 650,000\\\text { Total assets }&\$1,000,000\\\\\text { LIABITTES AND STOCKHOLDER.S' EQUTTY }\\\text { Accounts payable } & \$ 100,000 \\\text { Accrued expenses } & 90,000 \\\text { Long-term debt } & 250,000 \\\text { Common stock } & 100,000 \\\text { Paid-in capital } & 50,000 \\\text { Retained earnings } & 410,000\\\text { Total liabilities and stockholders' equity }&\$1,000,000\end{array}\end{array}$

$\begin{array} {c } \text {MARNI COMPANY }\\ \text {Income Statement }\\ \text {For the year ended December 31 }\\\begin{array} { l } \text {Sales (all on credit) }&\$2,000,000\\ \text {Cost of goods sold }&1,750,000\\ \text { Gross profit}&\$250,000\\ \text {Sales and administrative expenses }&30,000\\ \text { Fixed lease expenses}&10,000\\ \text {Depreciation }&60,000\\ \text { Operating profit}&\$150,000\\ \text {Interest expense }&25,000\\ \text { Profit before taxes}&\$125,000\\ \text { Taxes (40 \%) }&50,000\\ \text {Net income }&\$75,000\\\end{array}\end{array}$

Refer to the tables above. The firm's debt-to-asset ratio is ________.

• A) 44%
• B) 33%
• C) 19%
• D) 2.27%

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Definitions:

Labor Supply Curves

The graphical representation of the relationship between the labor provided by employees and the wage rate.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Leisure Time

Time available for ease and relaxation, where no work-related duties are expected, allowing for personal preferences in activities.

Marginal Productivity

The additional output resulting from the use of one more unit of a factor of production, holding other factors constant.