Asked by Abhishek Mittal on Jun 26, 2024
Verified
The company's acid-test (quick) ratio at the end of Year 2 is closest to:
A) 1.96
B) 1.41
C) 1.20
D) 1.48
Acid-Test Ratio
A financial metric that assesses a company's ability to cover its short-term liabilities with its most liquid assets.
Company
A business entity established by a collection of people to conduct and manage an enterprise, whether it's for commercial or industrial purposes.
- Determine and examine the acid-test (quick) ratio for the purpose of evaluating a corporation's short-term liquidity, excluding inventory considerations.
Verified Answer
AZ
Ashley ZimmermanJun 28, 2024
Final Answer :
B
Explanation :
Acid-test (quick)ratio = Quick assets* ÷ Current liabilities
= $424,000 ÷ $301,000 = 1.41 (rounded)
*Quick assets = Cash + Marketable securities + Current receivables
= $156,000 + $0 + $268,000 = $424,000
Reference: CH14-Ref3
Mayfield Corporation has provided the following financial data:
= $424,000 ÷ $301,000 = 1.41 (rounded)
*Quick assets = Cash + Marketable securities + Current receivables
= $156,000 + $0 + $268,000 = $424,000
Reference: CH14-Ref3
Mayfield Corporation has provided the following financial data:
Learning Objectives
- Determine and examine the acid-test (quick) ratio for the purpose of evaluating a corporation's short-term liquidity, excluding inventory considerations.