Question

The financial statements for Silver Service Company include the following​ items:
2019
2018
Cash
$ 47 comma 500
$ 42 comma 000
Shortminusterm Investments
30 comma 000
17 comma 500
Net Accounts Receivable
61 comma 000
55 comma 000
Merchandise Inventory
131 comma 000
47 comma 000
Total Assets
533 comma 000
553 comma 000
Accounts Payable
127 comma 500
132 comma 000
Salaries Payable
23 comma 000
14 comma 000
Longminusterm Note Payable
58 comma 000
59 comma 000
Compute the acidminustest ratio for 2018. ​ (Round your answer to two decimal​ places)
A.
0.78
B.
0.87
C.
0.66
D.
0.92

Answer 1

Answer- Acid test ratio for 2018 = 0.78 times.

Explanation- Acid-test (Quick ratio):- Current assets-Inventory-Prepaid expenses/Current Liabilities

      =($161500-$47000)/($132000+$14000)

     = $114500/$146000

    = 0.78 times