The financial statements of Island Furniture Company include the following items: $\begin{array}{lrr}
&2019&2018\
\text { Cash } & \$ 49,500 & \$ 40,000 \
\text { Short-term Investments } & 33,000 & 13,500 \
\text { Net Accounts Receivable } & 102,000 & 104,000 \
\text { Merchandise Inventory } & 157,000 & 145,000 \
\text { Total Assets } & 527,000 & 549,000 \
\text { Total Current Liabilities } & 309,000 & 288,000 \
\text { Long-term Note Payable } & 59,000 & 52,000
\end{array}$ What is the 2019 acid-test ratio? (Round your answer to two decimal places.)
A) 0.27
B) 1.11
C) 1.67
D) 0.60

Question

Quizplus · Accepted Answer

The acid-test ratio is calculated as (Cash + Short-term Investments + Net Accounts Receivable) / Total Current Liabilities. For 2019, this is (49,500 + 33,000 + 102,000) / 309,000 = 0.60.

The Financial Statements of Island Furniture Company Include the Following