Use the table for the question(s)below.
Consider the following balance sheet:
-Luther Corporation's cash ratio for 2019 is closest to:
A)1.19.
B)10.6.
C)0.44.
D)0.41.

Question

Use the table for the question(s)below.
Consider the following balance sheet:  
-Luther Corporation's cash ratio for 2019 is closest to:
A)1.19. 
B)10.6. 
C)0.44. 
D)0.41.

Quizplus · Accepted Answer

The cash ratio is calculated as cash and cash equivalents divided by current liabilities. 
For Luther Corporation in 2019, cash and cash equivalents is $508,000 and current liabilities are $1,157,000. 
Therefore, the cash ratio is: 
Cash ratio = $508,000 / $1,157,000 = 0.44 
Option C, 0.44, is the closest to the calculated cash ratio.

Use the Table for the Question(s)below