Erambo Company has $11,000 in cash,$6,000 in marketable securities,$27,000 in current receivables,$8,000 in inventories,and $51,000 in current liabilities.The company's acid-test (quick)ratio is closest to:
A) 0.53 to 1.
B) 0.75 to 1.
C) 0.86 to 1.
D) 1.02 to 1.

Question

Quizplus · Accepted Answer

The acid-test (quick) ratio is calculated by dividing the sum of cash, marketable securities, and current receivables by current liabilities.

Acid-test ratio = (cash + marketable securities + current receivables) / current liabilities

Plugging in the given values, we get:

Acid-test ratio = (11000 + 6000 + 27000) / 51000 = 0.86

Therefore, the closest option to the company's acid-test (quick) ratio is C) 0.86 to 1.

Erambo Company Has $11,000 in Cash,$6,000 in Marketable Securities,$27,000 in Current