Financial Statements for Narlock Company Appear Below -Narlock Company's Debt-To-Equity Ratio at the End of Year 2

question 27

Multiple Choice

Financial statements for Narlock Company appear below:

$\begin{array}{|l|r|}\hline&\text {Larned Company } \\&\text { Income Statement } \\&\text { For the Year Ended December 31, Year } \\&2\\&\text { (dollars in thousands) }\\\hline\text { Sales (All on Account) } & \$ 2250 \\\hline \text { Costs of Goods Sold } & \$ 1570 \\\hline \text { Gross Margin } & \$ 680 \\\hline \text { Operating Expenses } & \$ 270 \\\hline \text { Net Operating Income } & \$ 410 \\\hline \text { Interest Expense } & \$ 50 \\\hline \text { Net Income before Taxes } & \$ 360 \\\hline \text { Income Taxes (30\%) } & \$ 108 \\\hline \text { Net Income } & \$ 252 \\\hline\end{array}$

-Narlock Company's debt-to-equity ratio at the end of Year 2 was closest to which of the following?

• A) 0.32 to 1.
• B) 0.38 to 1.
• C) 0.70 to 1.
• D) 1.09 to 1.

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Definitions:

Randomized Block Design

An experimental setup that arranges subjects into blocks based on certain attributes before randomly assigning treatments, to reduce variation.

Treatments

In the context of experimentation, treatments refer to the different conditions applied to groups in an experiment to study their effects on outcomes.

Spearman's Rank Correlation

A non-parametric measure of rank correlation that assesses the strength and direction of association between two ranked variables.

Productivity

The rate at which goods or services are produced, often considered in terms of output per unit of input.