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 | $ 160 | $ 120 |
|---|
| Accounts receivable, net | 220 | 240 |
|---|
| Inventory | 120 | 130 |
|---|
| Prepaid expenses | 40 | 40 |
|---|
| Total current assets | 540 | 530 |
|---|
| Plant and equipment, net | 700 | 700 |
|---|
| Total assets | $ 1,240 | $ 1,230 |
|---|
| Liabilities and Stockholders' Equity | | |
|---|
| Current liabilities: | | |
|---|
| Accounts payable | $ 130 | $ 150 |
|---|
| Accrued liabilities | 90 | 90 |
|---|
| Notes payable, short term | 60 | 70 |
|---|
| Total current liabilities | 280 | 310 |
|---|
| Bonds payable | 280 | 290 |
|---|
| Total liabilities | 560 | 600 |
|---|
| Stockholders' equity: | | |
|---|
| Common stock, $2 par value | 100 | 100 |
|---|
| Additional paid-in capital | 200 | 200 |
|---|
| Retained earnings | 380 | 330 |
|---|
| Total stockholders' equity | 680 | 630 |
|---|
| Total liabilities & stockholders' equity | $ 1,240 | $ 1,230 |
|---|
| Income Statement |
| For the Year Ended December 31, Year 2 |
| (in thousands of dollars) |
| Sales (all on account) | $ 1,310 |
|---|
| Cost of goods sold | 780 |
|---|
| Gross margin | 530 |
|---|
| Selling and administrative expenses | 359 |
|---|
| Net operating income | 171 |
|---|
| Interest expense | 35 |
|---|
| Net income before taxes | 136 |
|---|
| Income taxes (30%) | 41 |
|---|
| Net income | $ 95 |
|---|
The acid-test (quick) ratio at the end of Year 2 is closest to:
▸ 0.96
▸ 1.36
▸ 1.50
▸ 1.93
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