Redfern Company Has Current Assets of $150,000 and Current Liabilities

question 58

Multiple Choice

Redfern Company has current assets of $150,000 and current liabilities of $60,000.How much inventory could it purchase on account and achieve its minimum desired current ratio of 2 to 1?

• A)$10,000
• B)$20,000
• C)$30,000
• D)$40,000

Recognize the importance of adapting management practices to meet the diverse needs of individuals and achieve productivity.

Understand the attributes of performance excellence according to Peters and Waterman.

Recognize the significance of the value chain in transforming raw materials into finished goods or services.

Comprehend the essence and applications of contingency thinking in management.

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Definitions:

Net Sales

This is the total amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and any discounts allowed.

Total Assets

Total Assets are all the assets a company owns, including cash, inventory, property, and equipment, showcasing the entity’s financial standing.

Inventory Turnover

A ratio showing how many times a company has sold and replaced inventory over a period.

Profit Margin

A financial metric indicating the percentage of revenue that remains as profit after all expenses are subtracted from sales.