Excerpts from Sydner Corporation's most recent balance sheet appear below:

-The acid-test ratio at the end of Year 2 is closest to:
A)1.67
B)1.00
C)0.97
D)1.25

Question

Excerpts from Sydner Corporation's most recent balance sheet appear below:

-The acid-test ratio at the end of Year 2 is closest to:
A)1.67 
B)1.00 
C)0.97 
D)1.25

Quizplus · Accepted Answer

The acid-test ratio is calculated as follows:
Acid-Test Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities

At the end of Year 2:
Cash = $200,000
Marketable Securities = $100,000
Accounts Receivable = $150,000

Current Liabilities = $425,000
Therefore, Acid-Test Ratio = ($200,000 + $100,000 + $150,000) / $425,000 = 0.97

Hence, the answer is C) 0.97.

Excerpts from Sydner Corporation's Most Recent Balance Sheet Appear Below