Question

Data from Fontecchio Corporation's most recent balance sheet appear below: Cash $ 51,000 Marketable securities $ 52,000 Accounts receivable $ 11,800 Inventory $ 88,000 Prepaid expenses $ 46,000 Current liabilities $ 328,000 The corporation's acid-test ratio is closest to:

Answer 1

0.35

Step-by-step explanation:

Calculation to determine what The corporation's acid-test ratio is closest to:

First step is to calculate the Quick assets

Using this formula

Quick assets = Cash + Marketable securities + Accounts receivable + Short-term notes receivable

Let plug in the formula

Quick assets= $51,000 + $52,000 + $ 11,800 + $0

Quick assets= $114,800

Now let calculate the Acid-test ratio

Using this formula

Acid-test ratio = Quick assets ÷ Current liabilities

Let plug in the formula

Acid-test ratio = $114,800 ÷ $ 328,000

Acid-test ratio = 0.35

Therefore The corporation's acid-test ratio is closest to:0.35