Erastic Corporation has $14,000 in cash, $8,000 in marketable securities, $34,000 in account receivable, $40,000 in inventories, and $42,000 in current liabilities. The corporation's current assets consist of cash, marketable securities, accounts receivable, and inventory. The corporation's acid-test ratio is closest to:

Question

Quizplus · Accepted Answer

The acid-test ratio is calculated as (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities. For Erastic Corporation, this is ($14,000 + $8,000 + $34,000) / $42,000 = $56,000 / $42,000 = 1.33.

Erastic Corporation Has $14,000 in Cash, $8,000 in Marketable Securities