The Following Balance Sheet Information Is Provided for Duke Company

question 3

Multiple Choice

The following balance sheet information is provided for Duke Company for Year 2:
$\begin{array}{lr}\text { Assets }\\\text { Cash }&\$5,400\\\text { Accounts receivable }&15,500\\\text { Inventory }&18,000\\\text { Prepaid expenses }&1,600\\\text { Plant and equipment, net of depreciation }&20,200\\\text { Land }&19,950\\\text { Total assets }&\$80,650\\\text { Liabilities and Stockholders' Equity }\\\text { Accounts payable } & 4,500 \\\text { Salaries payable } & 11,500 \\\text { Bonds payable (due in ten years) } &19,000 \\\text { Common stock, no par } & 30,000 \\\text { Retained earnings } &15,650\\\text { Total liabilities and stockholders' equity }&\$80,650\end{array}$

What is the company's current ratio? (Round your answer to 2 decimal places.)

• A) 1.16
• B) 1.31
• C) 2.53
• D) 3.79

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Definitions:

Internalized

This term generally refers to the absorption of external effects or costs by the decision-maker, often in the context of environmental economics.

Coase Theorem

An economic theory stating that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights.

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be positive or negative.

External Costs

Costs generated by a production or consumption activity that are not borne by the producer or consumer but by society at large.