Question

Data from Fontecchio Corporation's most recent balance sheet appear below:

Cash $ 37,000
Marketable securities $ 39,000
Accounts receivable $ 97,600
Inventory $ 77,000
Prepaid expenses $ 32,000
Current liabilities $ 248,000
The corporation's acid-test ratio is closest to:_______
a. 0.56
b. 0.37
c. 0.19
d. 0.35

Answer 1

the acid test ratio is 0.7 times

Step-by-step explanation:

The computation of the acid test ratio is shown below;

Acid test ratio is

= Quick assets ÷ current liabilities

= (Cash + marketable securities + account receivable) ÷ current liabilities

= ($37,000 + $39,000 + $97,600) ÷ ($248,000)

= 0.7

Hence, the acid test ratio is 0.7 times

This is the answer but the same is not provided in the given options