A Company Has $40,000 in Cash, $75,000 in Short-Term Investments

question 108

Multiple Choice

A company has $40,000 in cash, $75,000 in short-term investments, $263,000 in net current receivables, and $110,000 in inventory. The total current liabilities of the firm are $305,000. The quick ratio of the company is:

• A)0)63.
• B)1)24.
• C)1)60.
• D)1)76.

---

Definitions:

Unequal Lives

Refers to comparing projects or assets with different durations or expected lifetimes to make investment or capital budgeting decisions.

Equivalent Annual Annuity

A method used in capital budgeting to compare the profitability of investments with different lifespan by converting them into an equivalent annuity.

Net Present Value

The calculation that compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account.

Cost of Capital

The return rate that a company must earn on its investment projects to maintain its market value and attract funds.