Presented below is information available for Radon Corp.:
Current Assets
Total current liabilities are $100,000.To two decimals, Radon's acid-test ratio is
A)5.60.
B)5.30.
C)2.80.
D).36.

Question

Presented below is information available for Radon Corp.:
Current Assets 
Total current liabilities are $100,000.To two decimals, Radon's acid-test ratio is
A)5.60. 
B)5.30. 
C)2.80. 
D).36.

Quizplus · Accepted Answer

The acid-test ratio formula is (Current Assets - Inventory) / Current Liabilities. Since no information is given about Inventory, we assume it is equal to 0. Therefore, Radon Corp.'s acid-test ratio is equal to their current assets divided by current liabilities, which is (Current Assets) / $100,000 = 11eb12c4_4e24_16c0_87ae_a978c2944661_TB3158_00 / $100,000 = 2.80. Therefore, the best choice is C.

Presented Below Is Information Available for Radon Corp