The Following Information Pertains to Arnez Company Invested Capital Is Defined as Total Assets Minus Current Liabilities

question 33

Multiple Choice

The following information pertains to Arnez Company:
$\begin{array}{ll}\text { Total assets } & \$ 150,000 \\\text { Net operating profit after taxes } & \$ 12,000 \\\text { Total current liabilities } & \$ 110,000 \\\text { Total expenses } & \$ 160,000 \\\text { Total liabilities } & \$ 115,000 \\\text { Total revenues } & \$ 180,000\end{array}$
Invested capital is defined as total assets minus current liabilities.The after-tax cost of capital is 10%.What is the economic profit?

• A) $8,000
• B) $20,000
• C) $40,000
• D) $50,000

---

Definitions:

Unit and Dollars

Refers to the measure of financial and physical quantities in terms of units (number of items) and their monetary value in dollars.

Monthly Net Operating Income

Net operating income calculated on a monthly basis, indicating the profitability of business operations within that month.

Fixed Expenses

Costs that do not change with the level of production or sales, such as rent and salaries, remaining constant over a period.

Monthly Advertising Budget

A planned amount of money dedicated to promoting a company's products or services for a month.