Abracadabra Inc

question 78

Multiple Choice

Abracadabra Inc. has total assets of $106,000 and a debt ratio of 40 percent. If last year's sales were $145,000 and sales are expected to grow 10 percent in the future, what is Abracadabra's capital intensity ratio?

• A) 0.73
• B) 1.37
• C) 0.44
• D) 2.27

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Definitions:

Break-even Point

The financial stage at which total revenues equal total expenses, indicating that a business is neither making a profit nor incurring a loss.

Variable Expenses

Costs that change in proportion to the level of activity or volume of production.

Sales

The transactions involving the exchange of goods or services for payment.

Net Operating Income

A measure of profitability that calculates the difference between a company's operating revenue and its operating expenses, excluding taxes and interest.