Use the Following Information for Questions Melrose Enterprise's Credit Terms Are Net 30 Days

question 42

Multiple Choice

Use the following information for questions: $\begin{array}{l}\begin{array}{lrr}&2011&2010\\\text { Current Assets }\\\text { Cash } & \$ 25,000 & \$ 26,250 \\\text { Accounts Receivable } & 247,500 & 299,000 \\\text { Inventory } & 1,950,000 & 1,725,000 \\\text { Prepaid expenses } & 4,000 & 4,000\\\text { Total Current Assets } & \$ 2,226,500&\$ 2,054,250\\\\\text { Current Liabilities } & \$ 1,400,000 & \$ 1,225,000 \\\text { Net Credit Sales } & \$ 2,400,000 & \$ 2,255,000\end{array}\end{array}$ Melrose Enterprise's credit terms are net 30 days.
-Melrose Enterprise Ltd's 2011 current ratio is:

• A)1.59:1
• B)1.39:1
• C)1.00:1
• D)0.19:1

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Definitions:

GDP

Gross Domestic Product, a measure of a country's economic performance, representing the total value of all goods and services produced over a specific time period.

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of all finished goods and services produced within a country's borders in a specific time period.

Military Aircraft

Aircrafts designed for use in warfare, including fighters, bombers, and transport planes.

GDP Deflator

A gauge for assessing the price rates of all new, locally manufactured, end goods and services in a country, applied to recalibrate nominal GDP to real GDP.