Rio Imports Information from the Financial Statements Are Provided Below

question 12

Multiple Choice

Rio Imports Information from the financial statements are provided below:
$\begin{array}{lll} & \underline { 2015 } & \underline { 2014 }\\\text { Current Liabilities } &\$ 460,000 & \$ 320,000 \\\text { Long-Term Liabilities } &240,000 & 640,000 \\\text { Stockholders' Equity } &840,000 & 1,080,000 \\\text { Net Cash Flows from Operating Activities } &160,000 & 102,000 \\\text { Interest and Principal Payments } &24,000 & 16,000 \\\text { Net Sales } &950,000 & 900,000 \\\text { Net Income } &180,000 & 144,000 \\\text { Interest Expense} &17,000 & 23,000 \\\text { Income Taxes } &32,000 & 29,000 \\\text { Dividends Paid to Common Stockholders } &30,000 & 60,000\end{array}$
-Refer to Rio Imports.The debt-to-equity ratio for 2015 is

• A)an indicator that the company's ability to meet current interest payments to creditors is increasing.
• B)increasing slightly from 2014 to 2015.
• C)an indicator that for every $1 of capital that has been provided by stockholders,creditors provided $0.83.
• D)an indicator that the company's reliance on stockholders for funding increased from 2014 to 2015.

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Definitions:

Profit Per Unit

The difference between the selling price and the cost of one unit of a product, indicating how much profit is made from selling a single unit.

Restaurant Market

A sector of the economy comprised of businesses that prepare and serve food and beverages to customers.

Vertical Distance

The difference in height or elevation between two points, often used in the context of graphs or geographical features.

Profit-Maximizing Quantity

The level of output at which a firm achieves the maximum possible profit, where marginal revenue equals marginal cost.