Future Business Leaders of America (FBLA) Business Calculations Practice Test

A credit ratio indicating that for every $2 in sales $1.25 is on credit can be expressed as:

1. $1.25/$2

2. 1:6

3. 1.25:2

4. $160,000/$100,000

The correct answer is: $160,000/$100,000

To express a credit ratio that indicates for every $2 in sales, $1.25 is on credit, the correct approach involves forming a fraction that reflects the relationship between the credit amount and total sales. The ratio can be set up as $1.25 for credit sales to $2 total in sales. Simplifying the fraction $1.25/$2 does indeed give the same relationship represented in different formats. However, translating this into a more straightforward ratio often results in fractional or ratio formats like 1:1.6 (which would require conversion). The expression $160,000/$100,000 illustrates another dimension of this ratio, showing that for every $100,000 in total sales, there is $160,000 credited, which aligns with the understanding of $1.25 in terms of percentages relative to amounts. Hence, simplifying yields a similar relationship but may confuse the total sums with sales and credit, often leading to a misinterpretation of the ratio. In this context, the ideal representation should ideally express the amount of credit relative to total sales or their equivalent in simpler terms, showing continuity in how credit impacts sales transactions.