Total Company has current liabilities in the amount of $1,250,000 and an acid test ratio of 3 and a current ratio of 7.What amount of quick assets does Total Company have on the balance sheet?
A)$8,750,000
B)$ 416,667
C)$3,750,000
D)$1,250,000
E)$2,500,000

Question

Quizplus · Accepted Answer

The acid test ratio is calculated as quick assets divided by current liabilities. With an acid test ratio of 3 and current liabilities of $1,250,000, the quick assets are $1,250,000 * 3 = $3,750,000.

Total Company Has Current Liabilities in the Amount of $1,250,000