What Is the Maximum Amount Gamma Can Borrow and Not

question 117

Multiple Choice

What is the maximum amount Gamma can borrow and not exceed a debt ratio of 0.2?

• A)$3,750,000
• B)$600,000
• C)$6,000,000
• D)$5,750,000

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Definitions:

According to GAAP

As per Generally Accepted Accounting Principles, which are a set of accounting standards and procedures used in the United States.

Financial Accounting Reports

Formal documents that communicate an organization's financial performance and position to external stakeholders, including income statements and balance sheets.

GAAP

Generally Accepted Accounting Principles; a set of rules and standards for financial reporting used in the United States.

Prime Costs

The combined total of direct labor and direct materials cost incurred in the manufacturing of products.