Data from Adamis Corporation's most recent balance sheet appear below: $\begin{array}{lr}
\text {Cash }&\$ 10,000 \
\text {Marketable securities. }&\$ 24,000 \
\text {Accounts receivable. }&\$ 40,000 \
\text {Inventory }&\$ 55,000 \
\text {Prepaid expenses. }&\$ 10,000 \
\text {Current liabilities. }&\$ 104,000
\end{array}$

The company's acid-test ratio is closest to:
A)0.33
B)0.71
C)0.81
D)0.10

Question

Data from Adamis Corporation's most recent balance sheet appear below: $\begin{array}{lr}
\text {Cash }&\$ 10,000 \
\text {Marketable securities. }&\$ 24,000 \
\text {Accounts receivable. }&\$ 40,000 \
\text {Inventory }&\$ 55,000 \
\text {Prepaid expenses. }&\$ 10,000 \
\text {Current liabilities. }&\$ 104,000
\end{array}$

The company's acid-test ratio is closest to:
A)0.33
B)0.71
C)0.81
D)0.10

Quizplus · Accepted Answer

The acid-test ratio is calculated as (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities. Here, it is (10,000 + 24,000 + 40,000) / 104,000 = 0.71.

Data from Adamis Corporation's Most Recent Balance Sheet Appear Below