MC Qu. 157 Financial statements for ...

Financial statements for Maraby Corporation appear below:

Maraby Corporation Balance Sheet December 31, Year 2 and Year 1 (dollars in thousands)
	Year 2	Year 1
Current assets:
Cash and marketable securities	$220	$190
Accounts receivable, net	190	160
Inventory	140	150
Prepaid expenses	70	80
Total current assets	620	580
Noncurrent assets:
Plant & equipment, net	1,180	1,150
Total assets	$1,800	$1,730
Current liabilities:
Accounts payable	$100	$120
Accrued liabilities	100	70
Notes payable, short term	160	160
Total current liabilities	360	350
Noncurrent liabilities:
Bonds payable	450	500
Total liabilities	810	850
Stockholders equity:
Common stock, $5 par	160	160
Additional paid-in capital-common stock	200	200
Retained earnings	630	520
Total stockholders equity	990	880
Total liabilities & stockholders equity	$1,800	$1,730

Maraby Corporation Income Statement For the Year Ended December 31, Year 2 (dollars in thousands)
Sales (all on account)	$1,960
Cost of goods sold	1,370
Gross margin	590
Selling and administrative expense	230
Net operating income	360
Interest expense	50
Net income before taxes	310
Income taxes (30%)	93
Net income	$217

Maraby Corporation's acid-test ratio at the end of Year 2 was closest to:

a. 0.51

b. 0.47

c. 1.14

d. 1.95