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Erastic Corporation has $17,000 in cash, $9,500 in marketable securities, $38,500 in account receivable, $46,000 in...

Erastic Corporation has $17,000 in cash, $9,500 in marketable securities, $38,500 in account receivable, $46,000 in inventories, and $45,000 in current liabilities. The corporation’s current assets consist of cash, marketable securities, accounts receivable, and inventory. The corporation’s acid-test ratio is closest to:

Multiple Choice

  • 2.47

  • 1.23

  • 0.86

  • 1.44

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Answer #1

Answer is 1.44

Quick Assets = Cash + Marketable Securities + Accounts Receivable
Quick Assets = $17,000 + $9,500 + $38,500
Quick Assets = $65,000

Acid-test Ratio = Quick Assets / Current Liabilities
Acid-test Ratio = $65,000 / $45,000
Acid-test Ratio = 1.44

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