Erastic Corporation has $16,000 in cash, $9,000 in marketable securities, $37,000 in account receivable, $44,000 in inventories, and $44,000 in current liabilities. The corporation's current assets consist of cash, marketable securities, accounts receivable, and inventory. The corporation's acid-test ratio is closest to:

Question

Quizplus · Accepted Answer

The acid-test ratio is calculated as (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities. For Erastic Corporation, this is ($16,000 + $9,000 + $37,000) / $44,000 = $62,000 / $44,000 = 1.41.

Erastic Corporation Has $16,000 in Cash, $9,000 in Marketable Securities