A Partial Balance Sheet for Captain D's Sportswear Is Shown

question 28

Multiple Choice

A partial balance sheet for Captain D's Sportswear is shown below.(dollars in thousands) The acid-test ratio is (rounded to two decimal places) :
$\begin{array} { | l | r | l | r | } \hline \text { Assets: } & & \text { Liabilities: } & \\\hline \text { Cash } & \$ 60 & \text { Accounts payable } & \$ 240 \\\hline \text { Accounts receivable (net) } & 170 & \text { Other liabilities } & \underline{ 80 } \\\hline \text { Investments } & 50 & \text { Total current liabilities } & 320 \\\hline \text { Inventory } & 200 & \text { Long-term liabilities } & \underline { 110 } \\\hline \text { Prepaid rent } & \underline{25} & \text { Total liabilities } & \underline { 430 } \\\hline \text { Total current assets } & \underline { 505 } & \text { Stockholders' equity: } & \\\hline \text { Property \& Equipment, (net) } & \underline { 255 } & \text { Common stock } & 150 \\\hline & & \text { Retained earnings } & \underline { 180 } \\\hline &\_\_\_ & \text { Total stockholders' equity } & \underline { 330 } \\\hline \text { Total assets } & \underline{\$ 760} & \text { Total liabilities and equity } & \underline{\$ 760} \\\hline\end{array}$

• A)0.25.
• B)0.88.
• C)1.17.

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Definitions:

Buying Stocks

The act of purchasing shares in a company with the expectation of earning a return on investment through dividends or stock price appreciation.

Cash Flow

Cash flow refers to the net amount of cash and cash-equivalents being transferred into and out of a business.

Direct Method

A cash flow statement preparation approach that involves reporting major classes of gross cash receipts and payments.

Accounts Receivable

Outstanding payments from customers to a company for products or services already rendered.