A Firm Has Sales of $1,200,net Income of $200,net Fixed

question 5

Multiple Choice

A firm has sales of $1,200,net income of $200,net fixed assets of $500,and current assets of $300. The firm has $200 in inventory. What is the common-size statement value of inventory?

• A) 10.0%
• B) 16.67%
• C) 25.0%
• D) 40.0%
• E) 67.67%

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Definitions:

Diversifiable Risk

A type of risk that can be reduced or mitigated through diversification or spreading investments across different assets to reduce exposure to any single risk.

Market Risk

The potential for financial loss due to fluctuations in market conditions, such as changes in stock prices, interest rates, or exchange rates.

Randomly Selected Stocks

Stocks chosen without any specific pattern, criteria, or bias, often used in sampling or experimental portfolios.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents held by an investor or institution.