Judith Corp.has current assets worth $50,000 and current liabilities worth $75,000.Current assets include inventory of $10,000.Calculate acid test ratio.
A) 1.500
B) 0.533
C) 0.625
D) 0.667

Question

Quizplus · Accepted Answer

The acid test ratio, also called quick ratio, is calculated as current assets minus inventory divided by current liabilities. 
In this case, the calculation would be: 
($50,000 - $10,000) / $75,000 = 0.533. 
Therefore, the best choice is B.