A corporation reports the following year-end balance sheet data.

-The company's acid-test ratio equals:
A)0.58
B)1.27
C)2.07
D)0.37
E)0.63

Question

A corporation reports the following year-end balance sheet data.

-The company's acid-test ratio equals: 
A)0.58 
B)1.27 
C)2.07 
D)0.37 
E)0.63

Quizplus · Accepted Answer

The acid-test ratio is calculated by dividing quick assets (cash, marketable securities, and accounts receivable) by current liabilities. 
Quick assets = $3,395 + $1,300 = $4,695 
Current liabilities = $3,706 
Acid-test ratio = $4,695 / $3,706 = 1.27 
Therefore, the best choice is B) 1.27.

A Corporation Reports the Following Year-End Balance Sheet Data