Refer to the following selected financial information from Dodge Company. Compute the company's acid-test ratio. $$\begin{array} { | l | r | }
\hline\
\hline \text { Cash } & \$ 42,250 \
\hline \text { Short-term investments } & 60,000 \
\hline \text { Accounts receivable, net } & 79,500 \
\hline \text { Merchandise inventory } & 115,000 \
\hline \text { Prepaid expenses } & 9,700 \
\hline \text { Accounts payable } & 111,400 \
\hline
\end{array}$$
A) 2.75.
B) 2.66.
C) 0.92.
D) 1.12.
E) 1.63.

Question

Refer to the following selected financial information from Dodge Company. Compute the company's acid-test ratio. $$\begin{array} { | l | r | } 
\hline\
\hline \text { Cash } & \$ 42,250 \
\hline \text { Short-term investments } & 60,000 \
\hline \text { Accounts receivable, net } & 79,500 \
\hline \text { Merchandise inventory } & 115,000 \
\hline \text { Prepaid expenses } & 9,700 \
\hline \text { Accounts payable } & 111,400 \
\hline
\end{array}$$
A) 2.75.
B) 2.66.
C) 0.92.
D) 1.12.
E) 1.63.

Quizplus · Accepted Answer

The acid-test ratio is calculated as (Cash + Short-term investments + Accounts receivable) / Accounts payable. Using the given values: (42,250 + 60,000 + 79,500) / 111,400 = 1.63.

Refer to the Following Selected Financial Information from Dodge Company