At the End of Last Year,Cessa Company Had Total Assets

question 81

Multiple Choice

At the end of last year,Cessa Company had total assets in the amount of $4,000,000 and total liabilities in the amount of $3,000,000.The company sold stock to new shareholders at the beginning of the current year for $1,000,000.As a direct result of this transaction,the:

• A)debt-to-assets ratio will decrease.
• B)asset turnover ratio will increase.
• C)net profit margin ratio will increase.
• D)net profit margin ratio will decrease.

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Definitions:

Net Sales

The sales income left after subtracting returns, reductions for damaged or missing items, and price discounts.

Sales Revenue

The income received by a company from its sales of goods or the provision of services, before any expenses are subtracted.

Net Sales

The amount of revenue generated from sales activities after returns, allowances, and discounts have been subtracted.

Operating Expenses

Operating expenses are the costs associated with running a business’s core activities on a day-to-day basis, excluding the cost of goods sold.