Alpha Company Provided the Following Balance Sheet for Year 2

question 91

Multiple Choice

Alpha Company provided the following balance sheet for Year 2:
$\begin{array}{lr}\text { Assets }\\\text { Cash }&\$5,400\\\text { Accounts receivable }&15,500\\\text { Inventory }&18,000\\\text { Prepaid expenses }&1,600\\\text { Plant and equipment, net of depreciation }&25,000\\\text { Land }&19,950\\\text { Total assets }&\$85,450\\\text { Liabilities and Stockholders' Equity }\\\text { Accounts payable } & 4,500 \\\text { Salaries payable } & 11,500 \\\text { Bonds payable (due in ten years) } & 10,000 \\\text { Common stock, no par } & 30,000 \\\text { Retained earnings } & 29,450\\\text { Total liabilities and stockholders' equity }&\$85,450\end{array}$

What is the company's plant assets to long-term liabilities ratio?

• A) 2.5
• B) 4.5
• C) 1.7
• D) None of these answers is correct.

---

Definitions:

Monopolistic Competition

A market structure in which many firms sell products that are similar but not identical, allowing for competition based on quality, price, and branding.

Goods Offered

The products made available to consumers in the market, including tangible items that satisfy needs or wants.

High Start-Up Costs

The significant initial investment required to establish a new business, which can include expenses related to research and development, manufacturing, marketing, and administrative infrastructure.

Few Competitors

A market condition where only a small number of firms operate, often leading to higher prices and reduced competition.