Question

At​ year-end, Stick Company has cash of $ 15 comma 000​, current accounts receivable of $ 30 comma 000​, merchandise inventory of $ 40 comma 200​, and prepaid expenses totaling $ 5 comma 900. Liabilities of $ 60 comma 000 must be paid next year. What is Stick's ​acid-test ratio?

Answer 1

Answer:

0.75 times

Explanation:

The computation of the acid test ratio is shown below:

Quick ratio = Quick assets ÷ total current liabilities  

where,  

Quick assets = Account receivable + cash balance

=  $30,000 + $15,000

= $45,000

And, the current liabilities is $60,000

Now put these values to the above formula  

So, the value would equal to

= $45,000 ÷ $60,000

= 0.75 times