Presented below is information related to Tolbert Company. $\begin{array}{lr}\text { Current Assets }\
\text { Cash } & \$ 4,000 \
\text { Short-term investments } & 75,000 \
\text { Accounts receivable } & 61,000 \
\text { Inventories } & 110,000 \
\text { Prepaid expenses } & 30,000\
\text { Total current assets }&\$280,000
\end{array}$ Total current liabilities are $100,000. What is the acid-test ratio?
A) 2.8 to 1.
B) 2.5 to 1.
C) 1.4 to 1.
D) 0.8 to 1.

Question

Quizplus · Accepted Answer

The acid-test ratio is calculated as (Cash + Short-term investments + Accounts receivable) / Current liabilities = ($4,000 + $75,000 + $61,000) / $100,000 = $140,000 / $100,000 = 1.4 to 1.

Presented Below Is Information Related to Tolbert Company Total Current Liabilities Are $100,000