Mt Prevost Machine Corp -Refer to the Financial Statements of Mt

question 64

Multiple Choice

Mt. Prevost Machine Corp.
Income Statement (2001)
$\begin{array}{lr}\text { Sales } & \$ 4,000,000 \\ \text { Cost of goods sold } & 3,040,000 \\ \text { Gross profit } & 960,000 \\ \text { Selling and administrative expenses } & 430,000 \\ \text { Operating profit } & 530,000 \\ \text { Interest expense } & 160,000 \\ \text { Income before tax } & 370,000 \\ \text { Tax expense } & 148,000 \\ \text { Net income } & \$ 222,000\end{array}$
$\begin{array}{l}\text { Balance Sheet }\\\begin{array}{lrr} & 2001 & 2000 \\\text { Cash } & \$ 60,000 & \$ 50,000 \\\text { Aceounts receivable } & 550,000 & 500,000 \\\text { Inventory } & 690,000 & 620,000 \\\text { Total current assets } & 1,300,000 & 1,170,000 \\\text { Fixed assets } & 1,300,000 & 1,230,000 \\\text { Total assets } & 2,600,000 & 2,400,000 \\\text { Aceounts payable } & & \\\text { Bank loan } & 270,000 & 250,000 \\\text { Total current liabilities } & 580,000 & 500,000 \\\text { Bonds payable } & 850,000 & 750,000 \\\text { Total liabilities } & 900,000 & 1,000,000 \\\text { Common stock (25,000 shares) } & 1,750,000 & 1,750,000 \\\text { Retained earnings } & 250,000 & 250,000 \\\text { Total liabilities \& equity } & 600,000 & 400,000 \\\hline\end{array}\end{array}$
-Refer to the financial statements of Mt.Prevost Machine Corp.The firm's fixed asset turnover ratio for 2001 is ____.

• A) 1.60
• B) 3.16
• C) 3.31
• D) 4.64
• E) none of these

---

Definitions:

Discount Rate

Used to calculate the present value of future cash flows, reflecting the opportunity cost of capital investment.

Cost Savings

The reduction in expenses achieved by employing more efficient methods or making favorable decisions.

Salvage Value

An asset's anticipated market value upon concluding its period of utility.

Acceptable Project

Refers to a project considered feasible or desirable based on certain criteria such as return on investment, risk level, or alignment with strategic goals.