The Following Income Statement and Balance Sheets for Laser World

question 97

Essay

The following income statement and balance sheets for Laser World are provided:
$$\begin{array} { | c | }\hline\text { Laser World } \\\text { Income Statement }\\\text { For the year-ended December 31, 2012 }\\ \hline { \begin{array} {lr } \text { Sales revenue } & \$ 2,200,000 \\\text { Cost of goods sold } & 1,500,000 \\\text { Gross profit } & 700,000\\\text { Expenses: }\\\text { Operating expenses } & 350,000 \\\text { Depreciation expense } & 70,000 \\\text { Loss on sale of land } & 5,000 \\\text { Interest expense } & 25,000 \\\text { Income tax expense } & 60,000\\\text { Total expenses }&510,000\\\text { Net income }&\$190,000\\\end{array} } \\\hline\end{array}$$

Assuming that all sales were on account,calculate the following risk ratios for 2012:
$\begin{array}{ll}\text { 1. Receivables turnover ratio } & \text { 5. Current ratio } \\\text { 2. Average collection period } & \text { 6. Acid-test ratio } \\\text { 3. Inventory turnover ratio } & \text { 7. Debt to equity ratio } \\\text { 4. Average days in inventory } & \text { 8. Times interest earned ratio }\end{array}$

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Definitions:

Illusion

A false perception or misinterpretation of a real sensory stimulus, often leading to an incorrect understanding of reality.

Just Noticeable Difference

The minimum difference in stimulation required to detect a difference between two stimuli, also known as the difference threshold.

Perceptual Threshold

The minimum level at which a stimulus is detected by the senses.

Difference Threshold

is the minimum detectable difference between two sensory stimuli, also known as the just noticeable difference (JND), essential in sensory and perception studies.