Macmillan Corporation has provided the following financial data:
Dividends on common stock during Year 2 totaled $7,200. The market price of common stock at the end of Year 2 was $3.69 per share.
-The company's acid-test (quick)ratio at the end of Year 2 is closest to:
A) 1.96
B) 1.41
C) 1.20
D) 1.48

Question

Macmillan Corporation has provided the following financial data:
   Dividends on common stock during Year 2 totaled $7,200. The market price of common stock at the end of Year 2 was $3.69 per share.
-The company's acid-test (quick)ratio at the end of Year 2 is closest to:
A) 1.96 
B) 1.41 
C) 1.20 
D) 1.48

Quizplus · Accepted Answer

Acid-test (quick) ratio = Quick assets* ÷ Current liabilities
= $424,000 ÷ $301,000 = 1.41 (rounded)
*Quick assets = Cash + Marketable securities + Current receivables
= $156,000 + $0 + $268,000 = $424,000

Macmillan Corporation Has Provided the Following Financial Data