Asset Management and Debt Management Ratios Use the Following Information

question 89

Multiple Choice

Asset Management and Debt Management Ratios Use the following information to calculate current assets: Sales = $100 million, capital intensity ratio = .5 times, debt ratio = 30%, and fixed asset turnover ratio = 5 times.

• A) $10m
• B) $15m
• C) $30m
• D) $50m

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Definitions:

Debt Ratio

A financial ratio that measures the extent of a company's or individual's leverage, calculated by dividing total liabilities by total assets.

Selling And Administrative Expenses

Combined costs related to the selling of products and the administration of a business, excluding production costs.

Retention Ratio

The proportion of net income that is retained in the business rather than paid out to shareholders as dividends, indicating the amount reinvested in the company.

Interest Expense

This is the cost incurred by an entity for borrowed funds over a period of time, typically expressed as an annual percentage.