Answer:
The company's acid-test ratio equals: b. 1.28 .
Explanation:
Acid Test Ratio is a liquidity ratio that shows how efficient the resources have been utilized. It is also known as the Quick Ratio.
<em>Acid Test Ratio = ( Current Assets - Inventory ) / Current Liabilities</em>
Current Assets Calculation :
Cash $41,000
Accounts receivable $56,000
Inventory $61,000
Total Current Assets $158,000
Current Liabilities Calculation :
Current liabilities $76,000
Total Current Liabilities $76,000
Acid Test Ratio = ($158,000 - $61,000) / $76,000
= 1.2763 or 1.28
Conclusion :
The company's acid-test ratio equals: b. 1.28 .
