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Freiman Corporation's most recent balance sheet and income statement appear below: Balance Sheet December 31, Year 2 and Year 1 (in thousands of dollars) Year

Freiman Corporation's most recent balance sheet and income statement appear below:

Balance Sheet
December 31, Year 2 and Year 1
(in thousands of dollars)
Year 2 Year 1
Assets
Current assets:
Cash $ 166 $ 126
Accounts receivable, net 235 255
Inventory 126 136
Prepaid expenses 43 43
Total current assets 570 560
Plant and equipment, net 730 730
Total assets $ 1,300 $ 1,290
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 136 $ 156
Accrued liabilities 93 93
Notes payable, short term 63 73
Total current liabilities 292 322
Bonds payable 289 299
Total liabilities 581 621
Stockholders' equity:
Common stock, $2 par value 106 106
Additional paid-in capital 215 215
Retained earnings 398 348
Total stockholders' equity 719 669
Total liabilities & stockholders' equity $ 1,300 $ 1,290

Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
Sales (all on account) $ 1,430
Cost of goods sold 840
Gross margin 590
Selling and administrative expenses 374
Net operating income 216
Interest expense 41
Net income before taxes 175
Income taxes (30%) 53
Net income $ 122

The current ratio at the end of Year 2 is closest to:

Multiple Choice

  • 0.47

  • 0.48

  • 1.07

  • 1.95

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