12 ota2 Which of the following is NOT TRUE about the inventory turnover ratio? Select one a. The ratio measures how many times average inventory was purchased and sold during the period Ob If an ice cream stand has consistently weak sales dun to rainy weather, this would likely result in a low inventory turnover ratio c. A company's inventory turnover ratio should be compared across the yoars and to its competitors inventory turnover ratlos in order to conclude whether it is favorable or not Od A high turnover ratio typically means a company has weaker sales and declining demand for a company's product Notes 13.32 Which of the following best explains the purpose of the debt-to-equity ratio? Select one: O a. It is an exclusive measure of the proportion of cash in a company that is financed via bank loans or shares inued to investors O b. It measures how much debt has been used to finance the acquisition of assets relative to equily financing. O c. It measures how much of a company's start-up costs were financed either through debt of asset financing d. It measures the ability of the company to pay its total liabilities with total assets Notes Multiple Choice Questions Use the following information to answer questions 3-16 Presented below are the statement of earnings (2020) and the summary statement of financial position (2019 and 2020) for Trek Inc. Trek Inc. Statement of Earnings For the year ended December 31, 2020 (in thousands of dollars) Sales Cost of sales Gross profit $1,640 (800) 840 (40) (400) - 400 Depreciation expense Selling and administrative expenses Earnings from operations Loss on sale of equipment Interest expense Earnings before income taxes Income tax expense Net earnings (6) _(24) 370 (100) $_270 Trek Inc. Summary Statement of Financial Position Dec 31, 2019 Trek Inc. Summary Statement of Financial Position (in thousands of dollars) Dec. 31, 2020 Assets Cash S 52 Short-term Investments 80 Account Receivable (net) 198 Inventories 240 Prepaid Expenses 3 Property, Plant and Equipment (net) 852 Total Assets $1.430 $ 60 40 80 160 7 853 $1,200 Liabilities and Shareholders' Equity Current Liabilities $ 240 200 Bonds Payable Common Shareholders' Equity Total Liabilities and Shareholders' Equity S 160 200 840 $1.200 990 $1.430 Additional information: a) Trek, Inc, purchased new equipment in 2020 for $55,000. It also sold used equipment during the year. b) Trek Inc. had 84.000 common shares outstanding at December 31, 2019. On January 2, 2020. Trek Inc. sold and issued 6.000 additional common shares for a total amount of $60,000. There were no other transactions