What is the acid-test ratio for a merchant with the following account balances?
(Round your answer to two decimal places.)
Cash $22,000
Short-term investments 41,000
Net current receivables 50,000
Merchandise inventory 93,000
Total current liabilities 275,000
A) 0.75B) 0.41C) 0.60D) 0.81

Note that, inventories is not added because Acid test ratio also called quick ratio compares current asset with current liabilities and inventories can be difficult to sell in current terms.

jepessoa jepessoa · Answer 2 · 2020-04-24T05:21:16+02:00

jepessoa jepessoa

24-04-2020

Answer:

B) 0.41

Explanation:

acid test ratio formula = (current assets excluding inventory) / current liabilities

current assets excluding inventory = $22,000 (cash) + $41,000 (short term investments) + $50,000 (net current receivables) = $113,000
current liabilities = $275,000

acid test ratio = $113,000 / $275,000 = 0.41

The acid test ratio measures the company's ability to pay its short term debts.

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What is the acid-test ratio for a merchant with the following account balances? (Round your answer to two decimal places.) Cash $22,000 Short-term investments 41,000 Net current receivables 50,000 Merchandise inventory 93,000 Total current liabilities 275,000 A) 0.75B) 0.41C) 0.60D) 0.81

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What is the acid-test ratio for a merchant with the following account balances?
(Round your answer to two decimal places.)
Cash $22,000
Short-term investments 41,000
Net current receivables 50,000
Merchandise inventory 93,000
Total current liabilities 275,000
A) 0.75B) 0.41C) 0.60D) 0.81