A company has $50,000 in cash, $85,000 in short-term investments, $120,000 in net current receivables, and $145,000 in inventory. The total current liabilities of the firm are $275,000. The acid-test ratio of the company is:

Question

Quizplus · Accepted Answer

The acid-test ratio is calculated as (Cash + Short-term investments + Net current receivables) / Current liabilities. Here, it is ($50,000 + $85,000 + $120,000) / $275,000 = $255,000 / $275,000 = 0.93.

A Company Has $50,000 in Cash, $85,000 in Short-Term Investments