Using the Selected Information Given Below for Luk Company, Calculate

question 40

Essay

Using the selected information given below for Luk Company, calculate the return on assets, debt ratio, and profit margin. Comment on the results of operations and the financial position of the company for the year.
$$\begin{array} { | l | l | } \hline \text { Sales } & 1,050,000 \\\hline \text { Expenses } & 795,000 \\\hline \text { Assets (begining of the year) } & 1,500,000 \\\hline \text { Assets (end of the year) } & 1,900,000 \\\hline \text { Labilities } & 850,000 \\\hline\end{array}$$

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business.

Fixed Costs

Expenses that do not change with the level of output or sales in the short term.

Marginal Cost Curve

Graphical representation showing how the cost to produce one more unit changes as production increases, typically U-shaped due to economies and diseconomies of scale.

Average Total Cost Curve

A graphical representation showing the average cost per unit of output, calculated by dividing total costs (both fixed and variable) by the number of units produced.