Review of the ﬁnancial statements revealed the following for Petrolis Sales Inc. Sales $1,250,000, Net income $37,500, Total assets $650,000, Long-term debt $750,000, Interest expense $65,000 and Cost of goods sold $775,000. When preparing common size ﬁnancial statements interest expense would be shown as
A) 9.4%
B) 8.4%
C) 5.2%
D) 10%

Question

Quizplus · Accepted Answer

Interest expense as a percentage of sales is calculated as ($65,000 / $1,250,000) * 100 = 5.2%.

Review of the ﬁNancial Statements Revealed the Following for Petrolis