Financial statements for Marcial Company appear below:

-Marcial Company's acid-test (quick)ratio at the end of Year 2 was closest to which of the following?
A) 0.25 to 1.
B) 0.76 to 1.
C) 1.04 to 1.
D) 1.32 to 1.

Question

Financial statements for Marcial Company appear below:

-Marcial Company's acid-test (quick)ratio at the end of Year 2 was closest to which of the following?
A) 0.25 to 1. 
B) 0.76 to 1. 
C) 1.04 to 1. 
D) 1.32 to 1.

Quizplus · Accepted Answer

The acid-test (quick) ratio is calculated by dividing the sum of cash, marketable securities, and accounts receivable by current liabilities. This ratio measures a company's ability to meet its short-term obligations with its most liquid assets. Without specific numbers from Marcial Company's financial statements, the correct answer cannot be determined through calculation. However, given the options, the choice that represents a plausible acid-test ratio for a healthy company is 1.04 to 1, as it indicates the company has slightly more liquid assets than current liabilities.

Financial Statements for Marcial Company Appear Below