The Following Accounts Represent the Financial Status of Fandango Company

question 7

Multiple Choice

The following accounts represent the financial status of Fandango Company as of October 1.The business has cash of $100,000. It must pay its suppliers $250,000 within 60 days. It has a mortgage outstanding of $3.1 million, of which $100,000 is owed within the next 12 months. Inventory totals $700,000 and the net book value of its land, building and equipment is $3.6 million. Income tax payable equals $50,000. It has $1 million in shareholder's equity. The value of the Company's working capital is

• A) $300,000
• B) $350,000
• C) $800,000
• D) $400,000
• E) $1 million

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Definitions:

Dummy Variables

Variables created to assign numerical values to categorical data, often used in regression analysis to include qualitative factors as independent variables.

Qualitative Variables

Variables that categorize or describe attribute characteristics without a natural numerical order or ranking.

Regression Model

A mathematical model that describes the relationship between a dependent variable and one or more independent variables.

Multiple Regression

A statistical technique used to model and analyze the relationship between a dependent variable and two or more independent variables.