Phillips Company had the following financial data for the year ended December 31,2019. $$\begin{array} { | l | r | }
\hline \text { Cash } & \$ 42,000 \
\hline \text { Cash equivalents } & 80,000 \
\hline \text { Long term investments } & 55,000 \
\hline \text { Total current liabilities } & 148,000 \
\hline
\end{array}$$ What is the cash ratio as of December 31,2019,for Phillips Company? (Round your answer to two decimal places.)
A) 0.28
B) 0.37
C) 0.45
D) 0.82

Question

Phillips Company had the following financial data for the year ended December 31,2019. $$\begin{array} { | l | r | } 
\hline \text { Cash } & \$ 42,000 \
\hline \text { Cash equivalents } & 80,000 \
\hline \text { Long term investments } & 55,000 \
\hline \text { Total current liabilities } & 148,000 \
\hline
\end{array}$$ What is the cash ratio as of December 31,2019,for Phillips Company? (Round your answer to two decimal places.)
A) 0.28
B) 0.37
C) 0.45
D) 0.82

Quizplus · Accepted Answer

The cash ratio is calculated as (Cash + Cash Equivalents) / Total Current Liabilities. For Phillips Company, this is ($42,000 + $80,000) / $148,000 = $122,000 / $148,000 = 0.82.

Phillips Company Had the Following Financial Data for the Year