Question

1.opal company has total assets of $700,000 and total liabilities of $200,000 the company's debt- to - equity ratio is closest to:

0.50

0.20

0.40

0.29

2. kringle company a retailer had a cost of goods sold of $1,400,000 last tear the beginning inventory balance was $125,000 and the ending inventory balance was $120,000 the company inventory turnover ratio was closet to

11.43

11.20

10.49

11.60

3. the quick ratio

a.is generally lower than the current ratio

b.excluded inventories and accounts receivable from the numerators of the fraction because of obsolescence and possible default on payment

c.represents the amount of cash on hand instead of the amount of working capital

d.is generally higher than current ratio

4. during september 40,000 units were produced. the standard quantity of material allowed per unit was 4 pounds at a standard cost of $2.50 per pound if there was a favorable usage variance of 250000 for september, the actual quantity of materials used must have been

190,000

95,000

100,000

150,000

Answer 1

1)OPTION - 0.40.

Debt equity ratio = Total liabilities / Total equity =>($200,000/$500,000) = 0.40

Total equity = total Assets - total liabilities =>$700,000 - $200,000 = $500,000.

2)OPTION - 11.43 Times.

Inventory turnover = Cost of goods sold /Average inventory => $1,400,000/((125000+120000)/2) =11.43 times

3)OPTION - A

LOWER THAN CURRENT RATIO. and it represents the amount of liquidity position in the company.

4) AQ = 60,000.

Usage variance = (SQ - AQ)*SP

=>250,000 f= (40000*4 -AQ)*2.50

AQ =60,000 OPTION IS NOT THERE.

If you have any doubts please comment on the answer.