What is the acid-test ratio for a merchant with the following account balances? (Round your answer to two decimal places.) $$\begin{array} { | l | r | }
\hline \text { Cash } & \$ 25,000 \
\hline \text { Short-term investments } & 43,000 \
\hline \text { Net current receivables } & 54,000 \
\hline \text { Merchandise inventory } & 92,000 \
\hline \text { Total current liabilities } & 279,000 \
\hline
\end{array}$$

Question

What is the acid-test ratio for a merchant with the following account balances? (Round your answer to two decimal places.) $$\begin{array} { | l | r | } 
\hline \text { Cash } & \$ 25,000 \
\hline \text { Short-term investments } & 43,000 \
\hline \text { Net current receivables } & 54,000 \
\hline \text { Merchandise inventory } & 92,000 \
\hline \text { Total current liabilities } & 279,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The acid-test ratio, also known as the quick ratio, is a liquidity ratio that measures a company's ability to pay off its current liabilities with quick assets. Quick assets include cash, marketable securities, and accounts receivable. The formula for the acid-test ratio is (cash + marketable securities + accounts receivable) / current liabilities. 
In this case, there is no information given about the cash and marketable securities balance, so we can only use the accounts receivable balance, which is $27,000. The current liabilities are $61,750. 
Thus, the acid-test ratio is (27,000 / 61,750) = 0.44. 
Therefore, the best choice is B.

What Is the Acid-Test Ratio for a Merchant with the Following