A Corporation Reports the Following Year-End Balance Sheet Data A) 058
B) 1

question 157

Multiple Choice

A corporation reports the following year-end balance sheet data. The company's debt ratio equals: $$\begin{array} { | l | r| r| r | } \hline \text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 75,000 \\\hline \text { Accounts receivable } & 55,000 & \text { Long-term liabilities } & 35,000 \\\hline \text { nnventory } & 60,000 & \text { Common stock } & 100,000 \\\hline \text { Equipment } & \underline { 145,000 } & \text { Retained earnings } & \underline { 90,000 } \\\hline \text { Total assets } &\underline{\$ 300,000 }& \text { Total liabilities and equity } & \underline{\$ 300,000} \\\hline\end{array}$$

• A) 0.58
• B) 1.27
• C) 2.07
• D) 0.37
• E) 0.63

---

Definitions:

Net Income

A company's overall profit after subtracting expenses and taxes from its revenue.

Manufacturing Margin

The difference between the sales revenue generated from manufactured goods and the cost of goods sold, reflecting the profitability of the manufacturing operations.

Variable Costing

A costing method that includes only variable manufacturing costs - direct materials, direct labor, and variable manufacturing overhead - in product costs.

Variable Cost

Variable costs are expenses that vary directly with the level of production or sales volume.