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24 October, 00:12

Erastic Company 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 company's current assets consist of cash, marketable securities, accounts receivable, and inventory. The company's acid-test ratio is closest to

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  1. 24 October, 00:24
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    1.33

    Explanation:

    Data provided in the question:

    Cash = $14,000

    Marketable securities = $8,000

    Account receivable = $34,000

    Current liabilities = $42,000

    Now,

    Acid Test Ratio

    = (Cash + Marketable securities + Account receivable) : Current Liabilities

    = ($14,000 + $8,000 + $34,000) : $42,000

    = $56,000 : $42,000

    = 1.33
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