Answer is (c)
Because when we calculate acid test ratio we exclude Inventories and prepaid expenses from current assets.
An acid-test ratio, also known as the quick ratio, that is much smaller than the current...
quick ratio that is much smaller than the current ratio reflects A. a small portion of current assets is in inventory. B. that the firm will have a high inventory turnover. C. that the firm will have a high return on assets. D. a large portion of current assets is in inventory.
Dennisport Corporation has an acid-test ratio of 1.6. It has current liabilities of $52,000 and noncurrent assets of $82,000. The corporation's current assets consist of cash, marketable securities, accounts receivable, prepaid expenses, and Inventory. If Dennisport's current ratio is 1.8, its inventory and prepaid expenses must be: Multiple Choice Ο $11,600 Ο $10.400 Ο $54,000 Ο S48,000
Calculating the Current Ratio and the Quick (or Acid-Test) Ratio LoLo Lemon Company has current assets equal to $500,000. Of these, $300,000 is cash, $75,000 is accounts receivable, $125,000 is inventory, and the remainder is marketable securities. Current liabilities total $425,000. Required: Note: Round answers to two decimal places. 1. Calculate the current ratio. 2. Calculate the quick ratio (acid-test ratio).
Question Completion Status: QUESTION 1 Find the best match A. Acid test ratio or Quick ratio - - Current Assets - current liabilities 7 Current assets divided by current liabilities B. Current Ratio (Current assets-prepaid expenses-merchandise inventory) divided by current liabilities C. Working capital D. Gross Margin Ratio QUESTION 2 James Company's current assets are Cash-$40,000, Accounts Receivable $5000, Inventory $3000, and prepaid expenses $2000. Their current liabilities are $10,000. Their long term liabilities were $20,000. What is the company's...
Short-Term Solvency Ratios (Liquidity Rations) 1. Calculate current ratio and quick/liquid/acid test ratio from the following: A Sundry debtors RO 400,000 Stock RO 160,000 A Marketable securities RO 80,000 Cash RO 120,000 * Prepaid expenses RO 40,000 Bill payables RO 80,000 Sundry creditors RO 160,000 A Debentures RO 200,000 Outstanding Expenses RO 160,000 2 Calculate current ratio and anikliidid tact rastin from the following Short-Term Solvency Ratios (Liquidity Rations) 1. Calculate current ratio and quick/liquid/acid test ratio from the following:...
Compute the (1) current ratio and the (2) quick ratio for Nikey, Inc. using the following excerpt from the balance sheet reported in a recent financial statement of Nikey, Inc. At May 31 (in millions) 2020 Current assets Cash and equivalents $6,934 Short-term investments 3,730 Accounts receivable, net 6,044 Inventories 7,807 Deferred income taxes 700 Prepaid expenses and other current assets 3,542 Total current assets $28,757 Current liabilities Current portion of long-term debt $182 Notes payable 126 Accounts payable 3,623...
The Seabury Corporation has a current ratio of 3.6 and an acid-test ratio of 2.4. The corporation's current assets consist of cash. marketable securities, accounts receivable, and inventories. Inventory equals $84,000. Seabury Corporation's current liabilities must be: (Round your intermediate calculations to 1 decimal place.) Multiple Choice Ο 5168,000 Ο $84,000 Ο $100,800 Ο ( 570,000
1. The quick ratio, measured by current assets less inventories divided by current liabilities, is also referred to as an "acid test" ratio and provides a measure of a company's ability to meet current obligations. a. True b. False 2. Shorter-term cash budgets, in general, are used for actual cash control while longer-term budgets are used primarily for planning purposes. a. True b. False 3. A just-in-time system of inventory control requires that manufacturers coordinate production with suppliers so that...
Which of the statements below is FALSE? A) The acid ratio test equals current assets minus inventories divided by current liabilities. B) Examples of liquidity ratios include the current ratio, the cash coverage ratio, and the quick ratio. C) The current ratio is current assets divided by current liabilities. D) Inventory turnover equals cost of goods sold divided by inventory.
Using the following year-end information for Calvin's Clothing, calculate the current ratio and acid-test ratio for the business: Cash Short-term investments Accounts receivable Inventory Prepaid expenses Accounts payable Other current payables $ 51,680 8,000 46,000 150,000 8,520 102,000 30,100 Multiple Choice 1.00 and 1.00 0.50 and 1.25 < Prey 3 of 3 !!! Next > .pdf