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10 February, 01:43

Selected financial data regarding current assets and current liabilities for a company, a competitor in the cruise line industry, is provided: ($ in millions) Current assets: Cash and cash equivalents $ 307 Current investments 82 Net receivables 218 Inventory 122 Other current assets 138 Total current assets $ 867 Current liabilities: Accounts payable $ 1,165 Short-term debt 709 Other current liabilities 904 Total current liabilities $ 2,778 Required: 1. Calculate the current ratio and the acid-test ratio for the company. (Enter your answers in millions, not in dollars. For example, $5,500,000 should be entered as 5.5.)

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  1. 10 February, 01:55
    0
    0.31; 0.27

    Explanation:

    Given that,

    Total current assets = $867

    Inventory = $22

    Total current liabilities = $2,778

    Current ratio:

    = Current assets : Current liabilities

    = $867 : $ 2,778

    = 0.31

    Acid test ratio:

    = (Current assets - Inventory) : Current liabilities

    = ($867 - $122) : $ 2,778

    = $745 : $2,778

    = 0.27

    Therefore, the current ratio and acid test ratio are 0.31 and 0.27, respectively.
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