Asked by Annette Herrera on Jun 23, 2024
Verified
The company's acid-test (quick) ratio is closest to:
A) 2.47
B) 2.83
C) 3.10
D) 4.25
Acid-Test Ratio
A liquidity ratio that measures a company's ability to pay off its current liabilities with quick assets (cash, marketable securities, and accounts receivable).
Company
A business entity established by a collection of people to conduct and manage a commercial venture.
- Ascertain and interpret the acid-test (quick) ratio to gauge a company's immediate financial fluidity, not including inventory in the assessment.
Verified Answer
BS
Baila SkendzielJun 28, 2024
Final Answer :
B
Explanation :
Acid-test (quick)ratio = Quick assets* ÷ Current liabilities
= $473,000 ÷ $167,000 = 2.83 (rounded)
*Quick assets = Cash + Marketable securities + Current receivables
= $188,000 + $0 + $285,000 = $473,000
Reference: CH14-Ref2
Macmillan Corporation has provided the following financial data:
Dividends on common stock during Year 2 totaled $7,200.The market price of common stock at the end of Year 2 was $3.69 per share.
= $473,000 ÷ $167,000 = 2.83 (rounded)
*Quick assets = Cash + Marketable securities + Current receivables
= $188,000 + $0 + $285,000 = $473,000
Reference: CH14-Ref2
Macmillan Corporation has provided the following financial data:
Dividends on common stock during Year 2 totaled $7,200.The market price of common stock at the end of Year 2 was $3.69 per share.
Learning Objectives
- Ascertain and interpret the acid-test (quick) ratio to gauge a company's immediate financial fluidity, not including inventory in the assessment.