Determine the value of cash given the following information: cash ratio = 1.5625; cash equivalents = $500 ; current liabilities = $1,600.
A) $1,500
B) $2,000
C) $2,500
D) $3,000
E) $3,500

Question

Quizplus · Accepted Answer

The cash ratio is calculated as (Cash + Cash Equivalents) / Current Liabilities. Given the cash ratio is 1.5625, cash equivalents are $500, and current liabilities are $1,600, we can set up the equation 1.5625 = (Cash + 500) / 1,600. Solving for Cash gives us Cash = (1.5625 * 1,600) - 500 = $2,500 - 500 = $2,000.

Determine the Value of Cash Given the Following Information: Cash