The Following Information Is from the Records of Stretch Limousines

question 128

Multiple Choice

The following information is from the records of Stretch Limousines, Inc.: The ending direct materials inventory is

• A) $175,000.
• B) $ 75,000.
• C) $ 50,000.
• D) $100,000.

---

Definitions:

Current Assets

Assets that a company expects to convert into cash, sell, or consume within one year or its normal operating cycle, whichever is longer.

Current Liabilities

Short-term financial obligations that are due within one year or within a normal operating cycle, such as accounts payable, wages payable, and short-term loans.

Company's Liquidity

The ability of a company to meet its short-term debt obligations, often assessed through liquidity ratios like the current ratio and quick ratio.

Times Interest Earned

A ratio measuring a company's ability to meet its interest obligations from its operating income.