Financial Statements for Marcell Company appear below: Marcell Company Statement

Question

Financial Statements for Marcell Company appear below: Marcell Company Statement of Financial Position December 31, Year 2 and Year 1 (dollars in thousands) Current assets: Cash and marketable securities $220 $210 Accounts receivable, net 170 170 Inventory 360 360 Prepaid expenses 80 80 Total current assets 830 820 Noncurrent assets: Plant & equipment, net 2,180 2,180 Total assets 3,010 2,980 Current liabilities: Accounts payable $170 $210 Accured liabilities 60 60 Notes payable, short term 340 410 Total current liabilities 570 680 Noncurrent liabilities: Bonds payable 600 620 Total liabilities 1,170 1,300 $1,170 $1,300 Stockholders' equity: Preferred stock, $10 par, 8% 220 220 Common stock, $5 par 260 260 Additional paid-in capital--common stock 460 460 Retained earnings 900 740 Total stockholders equity 1,840 1,840 Total liabilites & stockholders equity 3,010 2,980 Marcell Company Income Statement For the Year Ended December 31, Year 2 (dollars in thousands) Sales (all on account) $6,450 Cost of goods sold $4,520 Gross margin 1,930 Selling and administrative expense 760 Net operating income 1,170 Interest expense 110 Net income before taxes 1,060 Income taxes (30%) 318 Net income 742 Marcell Company's current ratio at the end of Year 2 was closest to: 0.77 1.32 1.46 1.07

Explanation / Answer

Current Ratio = Total Current Assets/Total Current Liabilities = 950/610 = 1.46

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