Data from Fontecchio Corporation's Most Recent Balance Sheet Appear Below

question 114

Multiple Choice

Data from Fontecchio Corporation's most recent balance sheet appear below:
$\begin{array} { l } \text {Cash. }&\$ 18,000\\ \text { Marketable securities}&\$ 24,000\\ \text { Accounts receivable.}&\$39,000 \\ \text {Short-term notes receivable. }&\$ 0\\ \text {inventory }&\$ 60,000\\ \text {Prepaid expenses }&\$14,000 \\ \text { Current liabilities}&\$120,000 \\\end{array}$
The corporation's acid-test ratio is closest to:

• A) 0.35
• B) 0.15
• C) 0.68
• D) 0.79

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Definitions:

Perfect Competition

An industry structure in which there are many firms, each being small relative to the industry and producing virtually identical products, and in which no firm is large enough to have any control over prices.

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded by consumers.

Marginal Revenue Curve

A graph showing the change in total revenue for a business that results from selling one additional unit of a product or service.

Perfectly Competitive Industry

A theoretical market structure where there are many buyers and sellers, homogeneous products, no barriers to entry and exit, and perfect information, leading to an efficient allocation of resources.