Use the Following Information to Calculate the Ratios Requested Below

question 40

Essay

Use the following information to calculate the ratios requested below.Round answers to two decimal places.Show your work.

$\begin{array}{lr}\text { Average inventory } &\$ 4,500 \\\text { Average total assets } & 50,000 \\\text { Cost of goods sold } & 15,750 \\\text { Income taxes expense } & 2,700 \\\text { Interest expense } & 1,500 \\\text { Net income } & 3,200 \\\text { Net sales } & 30,000 \\\text { Market price, December 31, on 2,000 shares } & \$ 48 / \text { share }\end{array}$

$$\begin{array} { | l | l | l | l| } \hline \text { Return an assets } &\quad & \text { Inventary turnover } &\quad \\\hline \text { Price/earning } ( \mathrm { P } / \mathrm { E } ) \text { ratio } & & \text { Interest coverage ratio } & \\\hline\end{array}$$

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Definitions:

Indifference Curve

A graph showing different bundles of goods between which a consumer is indifferent, highlighting combinations that provide the same level of utility to the consumer.

Total Utility

The total gratification or enjoyment a customer receives from using a specific amount of products or services.

Marginal Rate

The increase or decrease in a unit of an outcome resulting from a one unit change in another variable.

Substitution

The economic principle whereby consumers replace more expensive items with less costly alternatives, or firms use different inputs in their production process.