Presented below is information available for Concord Corporation. Current Assets Cash $ 4500 Short-term investments 50500 Accounts receivable 66000 Inventory 86000 Prepaid expenses 35000 Total current assets $ 242000 Total current liabilities are $50000. The acid-test ratio for Concord is:

Question

Business

Adrien Prince

18 November, 00:24

Presented below is information available for Concord Corporation. Current Assets Cash $ 4500 Short-term investments 50500 Accounts receivable 66000 Inventory 86000 Prepaid expenses 35000 Total current assets $ 242000 Total current liabilities are $50000. The acid-test ratio for Concord is:

+1

Answers (1)

Know the Answer?

Jadon Clark · Answer 1

2.42 times

Explanation:

The computation of the acid test ratio is shown below:

Acid test ratio = Quick Assets : Current liabilities

where,

Quick Assets = Cash + short term investment + account receivable

= $4,500 + $50,500 + $66,000

= $121,000

And, the current liabilities is $50,000

So the acid test ratio is

= $121,000 : 50,000

= 2.42 times

Basically we applied the above formula to find out the acid test ratio