Discount Travel has the following current assets: cash,$102 million;receivables,$94 million;inventory,$182 million;and other current assets,$18 million.Discount Travel also has the following liabilities: accounts payable,$98 million;current portion of long-term debt,$35 million;and long-term debt,$23 million.Based on these amounts,what is the acid-test ratio?

Question

Quizplus · Accepted Answer

The acid-test ratio is calculated by dividing current assets minus inventory and other current assets by current liabilities. 
Acid-test ratio = (cash + receivables) / (accounts payable + current portion of long-term debt) 
= ($102 million + $94 million) / ($98 million + $35 million) 
= $196 million / $133 million 
= 1.47

Discount Travel Has the Following Current Assets: Cash,$102 Million;receivables,$94 Million;inventory,$182