Sheldon Shoes Ltd. has provided you with the following selected information from 2020 and 2021: $\begin{array}{lrr}
&\underline{2021} & \underline{2020}\
\text { Cash } & \$ 15,500 & \$ 10,200 \
\text { Accounts receivable } & 18,000 & 22,000 \
\text { Short-term investments } & 30,000 & 60,000 \
\text { Inventory } & 29,000 & 38,500 \
\text { Total current assets } & 92,500 & 130,700 \
\text { Total current liabilities } & 101,000 & 122,000
\end{array}$ Which of the following best interprets Sheldon Shoe's acid-test ratio analysis?
A) Acid-test ratio has improved compared to prior year, increasing from 0.9 to 1.1.
B) Acid-test ratio has weakened compared to prior year, decreasing from 0.8 to 0.6.
C) Acid-test ratio has weakened compared to prior year, decreasing from 1.1 to 0.9.
D) Acid-test ratio has improved compared to prior year, increasing from 0.6 to 1.8.

Question

Quizplus · Accepted Answer

The Answer of Sheldon Shoes Ltd. has provided you with the following selected information from 2020 and 2021: $\begin{array}{lrr}
&\underline{2021} & \underline{2020}\
\text { Cash } & \$ 15,500 & \$ 10,200 \
\text { Accounts receivable } & 18,000 & 22,000 \
\text { Short-term investments } & 30,000 & 60,000 \
\text { Inventory } & 29,000 & 38,500 \
\text { Total current assets } & 92,500 & 130,700 \
\text { Total current liabilities } & 101,000 & 122,000
\end{array}$ Which of the following best interprets Sheldon Shoe's acid-test ratio analysis?
A) Acid-test ratio has improved compared to prior year, increasing from 0.9 to 1.1.
B) Acid-test ratio has weakened compared to prior year, decreasing from 0.8 to 0.6.
C) Acid-test ratio has weakened compared to prior year, decreasing from 1.1 to 0.9.
D) Acid-test ratio has improved compared to prior year, increasing from 0.6 to 1.8.

Sheldon Shoes Ltd Which of the Following Best Interprets Sheldon Shoe's Acid-Test Ratio