The Fingertips Company had the following financial data for the year ended December 31, 2015: $$\begin{array} { | l | r |}
\hline \text { Cash } & \$ 45,000 \
\hline \text { Cash equivalents } & 80,000 \
\hline \text { Long term investments } & 60,000 \
\hline \text { Total current liabilities } & 150,000 \
\hline
\end{array}$$ What is the cash ratio as of December 31, 2015, for Fingertips Company?
A) 0.30
B) 0.40
C) 0.53
D) 0.83

Question

The Fingertips Company had the following financial data for the year ended December 31, 2015: $$\begin{array} { | l | r |} 
\hline \text { Cash } & \$ 45,000 \
\hline \text { Cash equivalents } & 80,000 \
\hline \text { Long term investments } & 60,000 \
\hline \text { Total current liabilities } & 150,000 \
\hline
\end{array}$$ What is the cash ratio as of December 31, 2015, for Fingertips Company?
A) 0.30
B) 0.40
C) 0.53
D) 0.83

Quizplus · Accepted Answer

The cash ratio is calculated as (Cash + Cash Equivalents) / Total Current Liabilities = (45,000 + 80,000) / 150,000 = 0.83.

The Fingertips Company Had the Following Financial Data for the Year