If a Retail Store Has a Current Ratio of 2

question 110

Multiple Choice

If a retail store has a current ratio of 2.5 and current assets of $195,000,the amount of working capital is:

• A)$ 78,000
• B)$380,000
• C)$330,000
• D)$117,000

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Definitions:

Fixed Plant Capacity

The maximum output that a facility can produce in a given period under normal conditions, determined by its physical size and design.

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit or benefits gained from additional investment will eventually decline.

Explicit Costs

Direct, out-of-pocket expenses incurred in the operation of a business or investment.

Cash Expenditures

Funds spent by a company or individual in cash form for operating activities, investments, and financing.