Refer to the Following Selected Financial Information from McCormik, LLC

question 138

Multiple Choice

Refer to the following selected financial information from McCormik, LLC. Compute the company's current ratio for Year 2. $$\begin{array} { | l | r | r | } \hline &{ \text { Year 2 } } & { \text { Year 1 } } \\\hline \text { Cash } & \$ 37,500 &3 6 , 8 5 0 \\\hline \text { Short-term investments } & 90,000 & 90,000 \\\hline \text { Accounts receivable, net } & 85,500 & 86,250 \\\hline \text { Merchandise inventory } & 121,000 & 117,000 \\\hline \text { Prepaid expenses } & 12,100 & 13,500 \\\hline \text { Plant assets } & 388,000 & 392,000 \\\hline \text { Accounts payable } & 113,400 & 111.750 \\\hline \text { Net sales } & 711,000 & 706,000 \\\hline \text { Cost of goods sold } & 390,000 & 385,500 \\\hline\end{array}$$

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

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Definitions:

Dependent Variable

The variable in a study that is expected to change in response to manipulations of the independent variable, effectively measured to assess the effect.

Experimental Manipulation

The alteration of an independent variable to determine its effect on a dependent variable within an experiment.

Third-variable Problem

A scenario in research where an unmeasured variable causes or influences both variables of interest, potentially misleading interpretations of a correlation or relationship.

Causal Relationship

A connection between two events or states where one event is understood to be a direct result of the other.