The Balance Sheet of Hemp Ltd at 30 June 2012

question 11

Multiple Choice

The balance sheet of Hemp Ltd at 30 June 2012 showed: noncurrent assets $500 000; noncurrent liabilities $320 000; total liabilities $400 000; and shareholders' equity $300 000.What was the working capital ratio of Hemp Ltd at 30 June 2012?

• A) 2.5:1
• B) 1.75:1
• C) $120 000
• D) 1.56:1.

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Definitions:

Actual Overheads

The real costs incurred in the day-to-day operation of a business, including utilities, rent, and maintenance.

Capacity Utilization

A measure of how effectively an entity is using its production or operational capacity.

Budgeted Factory Overhead

The expected or estimated overhead costs for a factory within a certain period, typically used for planning and control purposes.

Budgeted Fixed Overhead

The predetermined estimate of the total fixed costs required to produce a specific amount of output over a fixed period.