Bread Enterprises Had a Current Ratio of 2 What Impact Will an Increase in the Market Price of 31

question 123

Multiple Choice

Bread Enterprises had a current ratio of 2.5 on December 31 of the current year.On that date, the company's assets were as follows: $$\begin{array} { l c } \text { CASH } & \$ 100,000 \\\text { ACCOUNTS RECEIVABLE, NET } & 600,000 \\\text { INVENTORY } & 960,000 \\\text { PREPAID EXPENSES } & 25,000 \\\text { EQUIPMENT, NET } & 2,200,000 \\\text { TOTAL ASSETS } & \$ 3,985,000\end{array}$$ What impact will an increase in the market price of the company's common stock from $24.50 to $37.20 have on a company's price-earnings ratio?

• A)It will increase the price-earnings ratio.
• B)It will decrease the price-earnings ratio.
• C)There will be no change.
• D)There is not enough information to determine the answer.

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