A Firm Has Sales of $3,400, Net Income of $390

question 82

Multiple Choice

A firm has sales of $3,400, net income of $390, total assets of $4,500, and total equity of $2,750. Interest expense is $40. What is the common-size statement value of the interest expense?

• A)0.89 percent
• B)1.18 percent
• C)3.69 percent
• D)10.26 percent
• E)14.55 percent

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Definitions:

Significance Level

The threshold of probability below which the null hypothesis is rejected in hypothesis testing.

Fair Coin

A theoretical coin which has an equal chance of landing on heads or tails.

Observed Frequencies

The actual number of occurrences or instances of a variable category observed in a statistical sample.

Chi-squared Goodness-of-fit Test

A statistical test used to determine if observed data fits a theoretical distribution.