Use the Table for the Question(s)below

question 28

Multiple Choice

Use the table for the question(s) below.
Luther Industries currently has the following balance sheet (in thousands of dollars) : Luther is about to add a new fleet of delivery trucks.The price of the fleet is $1.5 million.
-If Luther acquires the new fleet of delivery trucks using a capital lease,Luther's Debt to Equity ratio will be closest to:

• A)0.66.
• B)1.5.
• C)0.80.
• D)2.0.

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Definitions:

Merchandise Inventory

Goods that a company has in stock and available for sale to customers.

Office Supplies

Items used in offices by businesses and other organizations, typically including small expendable items such as pens, paper, staples, and envelopes.

Closing Process

The accounting procedure used to close out temporary accounts and transfer their balances to permanent accounts at the end of an accounting period.

Net Income

The amount of money remaining after all operating expenses, taxes, interest, and dividends are deducted from total revenue; a key indicator of company profitability.