Phillips Company Had the Following Financial Data for the Year

question 27

Multiple Choice

Phillips Company had the following financial data for the year ended December 31,2019. $$\begin{array} { | l | r | } \hline \text { Cash } & \$ 42,000 \\\hline \text { Cash equivalents } & 80,000 \\\hline \text { Long term investments } & 55,000 \\\hline \text { Total current liabilities } & 148,000 \\\hline\end{array}$$ What is the cash ratio as of December 31,2019,for Phillips Company? (Round your answer to two decimal places.)

• A) 0.28
• B) 0.37
• C) 0.45
• D) 0.82

---

Definitions:

Expansionary Gap

A situation where the actual output in an economy is higher than the potential output, often leading to inflation.

Potential GDP

The maximum output an economy can achieve when all resources are used efficiently and effectively, without causing inflation.

Cost-Push Inflation

Inflation that occurs when the prices of inputs such as labor and raw materials go up, causing a reduction in the supply of these products.

Expansionary Gap

A condition where an economy's real GDP exceeds its potential GDP, leading to inflationary pressures.