Assume the following data: Current assets = 500; Current liabilities = 250; Inventory = 200; Account receivables = 200.Calculate the cash ratio.(Assume that the firm has no marketable securities.)
A)0.4
B)2.0
C)1.5
D)1.2

Question

Quizplus · Accepted Answer

The cash ratio is calculated as (Current Assets - Inventory - Accounts Receivables) / Current Liabilities. Here, Cash = 500 - 200 - 200 = 100. Cash Ratio = 100 / 250 = 0.4.

Assume the Following Data: Current Assets = 500; Current Liabilities