Mccaughey Corporation's most recent balance sheet and income statement appear below:

-What is the company's acid-test ratio?
A) 0.68
B) 1.68
C) 2.14
D) 2.31

Question

Mccaughey Corporation's most recent balance sheet and income statement appear below:

-What is the company's acid-test ratio?
A) 0.68 
B) 1.68 
C) 2.14 
D) 2.31

Quizplus · Accepted Answer

The acid-test ratio is calculated by adding cash, marketable securities, and accounts receivable, then dividing that sum by current liabilities. Using the financial data provided, the calculation would be as follows:

Cash and cash equivalents: $42,000
Marketable securities: $15,500
Accounts receivable: $83,000
Total current assets: $140,500

Current liabilities: $65,500

Acid-test ratio: ($42,000 + $15,500 + $83,000) / $65,500 = 2.14

Therefore, the answer is C, 2.14.

Mccaughey Corporation's Most Recent Balance Sheet and Income Statement Appear