Using the following balance sheet information, find the firm's acid-test ratio. Cash and marketable securities $20 million
Accounts receivable $10 million
Inventory $30 million
Current liabilities $30 million
A) 0.60
B) 1.00
C) 1.40
D) 2.00

Question

Quizplus · Accepted Answer

The acid-test ratio is calculated as (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities. Here, it is ($20 million + $10 million) / $30 million = $30 million / $30 million = 1.00.

Using the Following Balance Sheet Information, Find the Firm's Acid-Test