On the Balance Sheet of Last Year,a Company Reports Total

question 71

Multiple Choice

On the balance sheet of last year,a company reports total assets of $8 million,common shares (book value) of $4 million,and retained earnings of $2 million.At the end of the current year,the net income was $ 1 million,and the whole amount was retained by the firm.Everything else (each of the aforementioned amounts other than retained earnings) was held constant.The debt-to-equity ratio at the end of the current year is:

• A) 0.17
• B) 0.14
• C) 0.25
• D) 0.33

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Definitions:

Capacity Utilization Rate

A metric that measures the proportion of potential economic output that is actually realized.

Net Investment

The total spent on new capital assets (capital expenditure) minus depreciation. It reflects the increase in the value of an entity's assets.

Sales Outlook

An estimate or forecast of future sales performance of a company or industry over a specific period.

Corporation

A legal entity that is separate and distinct from its owners, which can own assets, incur liabilities, and sell shares.