Using the following balance sheet information,find the firm's acid-test ratio.
$\begin{array}{|l|r|}
\hline \text { Cash and marketable securities } & \$ 20 \text { million } \
\hline \text { Accounts receivable } & \$ 10 \text { million } \
\hline \text { Inventory } & \$ 30 \text { million } \
\hline \text { Current liabilities } & \$ 30 \text { million } \
\hline
\end{array}$
A)0.60
B)1.00
C)1.40
D)2.00

Question

Quizplus · Accepted Answer

The acid-test ratio is calculated as (Cash and marketable securities + Accounts receivable) / Current liabilities = ($20 million + $10 million) / $30 million = 1.00.

Using the Following Balance Sheet Information,find the Firm's Acid-Test Ratio