Kannan Carpets Ltd Has Asked You to Calculate the Company's

question 20

Multiple Choice

Kannan Carpets Ltd has asked you to calculate the company's quick ratio for 2016.All you have is a partial balance sheet and some assumptions.Using the information provided, calculate Kannan's quick ratio for 2016. Gross profit margin = 50%
Inventory turnover (COGS/Inv) = 5
2001 sales = $3000

• A)0.2
• B)0.4
• C)0.6
• D)0.8

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Definitions:

Total Costs

An alternate formulation for the sum of all expenses incurred in the production of goods or services, reflecting both fixed and variable components.

Profit

The financial gain obtained when the revenue from business activities exceeds the costs and expenses associated with operating the business.

Economic Profit

The total revenue from operations minus both the explicit and implicit costs; it's a measure of profitability factoring opportunity costs.

Accounting Profit

The net income a company reports on its financial statements, calculated as total revenues minus explicit costs of doing business.