Muggles Manufacturing Has Asked You to Calculate the Company's Current

question 111

Multiple Choice

Muggles Manufacturing has asked you to calculate the company's current ratio. All you have is the partial balance sheet below, the year's sales revenue, and two ratios also shown below. Using that information, calculate Muggles' current ratio. Sales = $3,000
Cost Ratio = 45%
Inventory Turnover (COGS/Inv) = 5.0
$\begin{array}{llll}\text { Asssets }&&\text { Liabilities \& Equity }\\\text { Cash } & ? ? ? ? ? & \text { Accounts Payable } & \$ 50 \\\text { AR } & \$ 40 & \text { Accruals } & ? ? ? ? ? ? \\\text { Inventory } & ? ? ? ? ? & \text { Longterm Debt } & \$ 380 \\\text { Net Fixed Assets } & \$ 500 & \text { Equity } & \$ 250\\\text { Total Assets }&\$830&\text { Total Liabilities \& Equity }&??????\end{array}$

• A) .35
• B) .85
• C) 1.65
• D) 2.25

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Definitions:

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Established principles or recommendations that direct or advise specific actions or policies.

Prenuptial Agreement

An agreement made before marriage that defines each partner’s ownership rights in the other partner’s property. Prenuptial agreements must be in writing to be enforceable.

Postnuptial Agreement

A written agreement made between spouses after marriage, outlining the distribution of assets in the event of divorce or separation.

Business Assets

Resources owned by a business, considered valuable and necessary for its operations and growth, which can be tangible or intangible.