Refer to the Following Selected Financial Information from Gomez Electronics

question 218

Multiple Choice

Refer to the following selected financial information from Gomez Electronics. Compute the company's debt-to-equity ratio for Year 2. $\begin{array}{lrr}& \text { Year 2 } & \text { Year 1 } \\\text { Net sales } & \$ 478,500 & \$ 426,250 \\\text { Cost of goods sold } & 276,300 & 250,120 \\\text { Interest expense } & 9,700 & 10,700 \\\text { Net income before tax } & 67,250 & 52,680 \\\text { Net income after tax } & 46,050 & 39,900 \\\text { Total assets } & 317,100 & 288,000 \\\text { Total liabilities } & 181,400 & 167,300 \\\text { Total equity } & 135,700 & 120,700\end{array}$

• A) 1.75.
• B) 2.34.
• C) 0.75.
• D) 1.34.
• E) 2.63.

---

Definitions:

IPA

India Pale Ale, a style of beer characterized by a higher proportion of hops which originally preserved it for the long voyage from England to India.

HMO

A Health Maintenance Organization, a type of health insurance plan that restricts coverage to care from doctors who work for or contract with the HMO.

PPO

Preferred Provider Organization, a healthcare plan that offers members reduced rates if they choose healthcare providers from within a prescribed network.

Contracted Services

Professional services provided by an outside party under the terms of a contractual agreement.