Use This Balance Sheet and Income Statement for the First

question 124

Multiple Choice

Use this balance sheet and income statement for the first year of operations for Layton Novelties to answer the following question. Use ending balances whenever average balances are required for computing ratios. Laytan Navelties
Income St-tement
Far the Year Ended December 31, 2010
$\begin{array}{lr}\text { Net sales } & \$ 80,000 \\\text { Cost of goods sold } & 32,000 \\\text { Gross margin } & \$ 48,000 \\\text { Operating expenses } & 26,400\\\text { Net income }&\$21,600\end{array}$ The debt to equity ratio for Layton Novelties is

• A) 16-2/3 percent.
• B) 20 percent.
• C) 80 percent.
• D) 83-1/3 percent.

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Definitions:

Correlational Study

A research method that examines the relationship between two or more variables to determine if they move together in any way.

Ex Post Facto

A Latin term meaning "from after the fact," often used in legal contexts to describe laws that apply retroactively.

Observational

Pertains to a research method in which the investigator observes subjects without manipulating the study environment or the subjects themselves.

Experimental

Involving a trial or test to discover something unknown, often conducted under controlled conditions.