Calculating key financial ratios from account data

Steps:

• Identify relevant figures from the books: assets, liabilities, revenue, expenses.
• Apply ratio formulas: e.g., current ratio = current assets / current liabilities.
• Compute each option's value using the extracted data.
• Compare results to select the accurate interpretation.

Why B is correct:

• B matches the acid-test ratio formula (quick assets / current liabilities), excluding inventory for liquidity assessment.

Why the others are wrong:

• A misapplies gross profit margin by including non-operating items.
• C confuses equity with total capital in return on investment.
• D incorrectly uses average instead of ending balances for debt ratio.

Not enough information for full computation, but B aligns with standard accounting principles.

Final answer: B