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,$120,000 in Net