The ratio of __________ to __________ is an example of a __________ ratio.

A. quick assets; current liabilities; leverage
B. cost of goods sold; total assets; asset utilization
C. net credit sales; average owner's equity; leverage
D. net income after taxes; net sales; profit

D

To determine the correct answer, we can break down each option and identify the components involved.

Option A: The ratio of quick assets to current liabilities is an example of leverage. Quick assets are the assets that can be easily converted into cash, such as cash itself and accounts receivable. Current liabilities, on the other hand, are the debts or obligations that are expected to be settled within one year. The ratio of quick assets to current liabilities is a measure of a company's ability to meet its short-term obligations using readily available assets. However, this does not match the given answer choice, so we can eliminate option A.

Option B: The ratio of cost of goods sold to total assets is an example of asset utilization. The cost of goods sold represents the expenses incurred in producing or acquiring the goods that a company sells, while total assets encompass all the resources owned by the company, including both current and non-current assets. The ratio of cost of goods sold to total assets measures how effectively a company utilizes its assets to generate sales. However, this does not match the given answer choice, so we can eliminate option B.

Option C: The ratio of net credit sales to average owner's equity is an example of leverage. Net credit sales represent the sales made on credit after deducting sales returns and allowances, while average owner's equity measures the average value of the owner's investment in the company. The ratio of net credit sales to average owner's equity evaluates the company's ability to generate sales using the owner's equity as a leverage or amplification factor. However, this does not match the given answer choice, so we can eliminate option C.

Option D: The ratio of net income after taxes to net sales is an example of profit. Net income after taxes represents the amount of income earned by a company after deducting taxes, while net sales are the total sales revenue generated by the company. The ratio of net income after taxes to net sales, also known as the net profit margin, measures the percentage of net income earned for every dollar of net sales generated. This matches the given answer choice, so the correct option is D.