Refer to the Following Selected Financial Information from McCormik, LLC

question 139

Multiple Choice

Refer to the following selected financial information from McCormik, LLC. Compute the company's current ratio for Year 2. $$\begin{array} { | l | r | r | } \hline & \text { Year 2 } & { \text { Year 1 } } \\\hline \text { Cash } & \$ 37,500 & 36,850 \\\hline \text { Short-term investments } & 90,000 & 90,000 \\\hline \text { Accounts receivable, net } & 85,500 & 86,250 \\\hline \text { Merchandise inventory } & 121,000 & 117,000 \\\hline \text { Prepaid expenses } & 12,100 & 13,500 \\\hline \text { Plant assets } & 388,000 & 392,000 \\\text { Accounts payable } & 113,400 & 111.750 \\\hline \text { Net sales } & 711,000 & 706,00 \\\hline \text { Cost of goods sold } & 390,000 & 385,500 \\\hline\end{array}$$

• A) 2.26.
• B) 1.98.
• C) 2.95.
• D) 3.05.
• E) 1.88.

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Definitions:

Elasticity Coefficient

A numeric value that measures the responsiveness of the quantity demanded or supplied of a good to a change in one of its determinants, such as price.

Perfectly Inelastic

A situation where the demand for a product does not change in response to changes in price; the demand curve is perfectly vertical.

Gas-guzzler Automobiles

Describes vehicles that are inefficient in their fuel consumption, typically with lower miles per gallon.

Japanese Fuel-efficient Cars

Automobiles produced by Japanese manufacturers known for their high fuel efficiency and innovative engineering.