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Compute Belkin's acid-test ratio. Its competitor, Logit, has an acid-test ratio of 1.2. Which company is better able to pay for current liabilities with its quick assets?

1) Belkin
2) Logit
3) Both companies
4) Cannot be determined

User Karina H
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Final answer:

Without Belkin's financial information, we cannot compute its acid-test ratio to compare with Logit's ratio of 1.2. Therefore, it is impossible to determine which company is better positioned to pay off current liabilities with its quick assets.

Step-by-step explanation:

To compute Belkin's acid-test ratio, we require specific financial information from Belkin's balance sheet. The acid-test ratio, also known as the quick ratio, is a measure that evaluates a company's ability to pay its current liabilities with its most liquid assets, without relying on the sale of its inventory. It is calculated using the following formula:

Acid-Test Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities

Without Belkin's balance sheet data, we cannot compute its acid-test ratio. Therefore, we cannot compare Belkin's ratio to Logit, which has an acid-test ratio of 1.2, to determine which company is better able to pay off its current liabilities with quick assets.

User Mark Leiber
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