Opal Company Has Total Assets of $600,000 and Total Liabilities

question 80

Multiple Choice

Opal Company has total assets of $600,000 and total liabilities of $200,000.The company's debt-to-equity ratio is closest to:

• A) 0.35.
• B) 0.15.
• C) 0.50.
• D) 0.20.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent, salaries, and insurance premiums.

Contribution Margin

The amount by which sales revenue exceeds variable costs of goods sold, indicating how much revenue contributes towards covering fixed costs and generating profit.

Variable Costs

Expenses that change in proportion to the level of production or sales activity, such as raw materials and direct labor.

Break-even Sales

The amount of revenue needed to cover total costs, resulting in neither profit nor loss.