Mayfield Corporation has provided the following financial data: The company's acid-test (quick) ratio is closest to:
A) 1.73
B) 1.68
C) 2.28
D) 1.61

Question

Mayfield Corporation has provided the following financial data:  The company's acid-test (quick) ratio is closest to:
A) 1.73 
B) 1.68 
C) 2.28 
D) 1.61

Quizplus · Accepted Answer

To calculate the acid-test ratio, we need to subtract inventory from current assets and then divide the result by current liabilities.

Acid-test (quick) ratio = (Current Assets - Inventory) / Current Liabilities

Using the financial data provided, we can calculate the acid-test ratio as follows:

Acid-test ratio = (54,000 - 17,000) / 30,000
Acid-test ratio = 37,000 / 30,000
Acid-test ratio = 1.23

Therefore, the closest answer is D, 1.61.

Mayfield Corporation Has Provided the Following Financial Data: the Company's