Selected financial data regarding current assets and current liabilities for a company, a competitor in the cruise line industry, is provided: ($ in millions) Current assets: Cash and cash equivalents $ 307 Current investments 82 Net receivables 218 Inventory 122 Other current assets 138 Total current assets $ 867 Current liabilities: Accounts payable $ 1,165 Short-term debt 709 Other current liabilities 904 Total current liabilities $ 2,778 Required: 1. Calculate the current ratio and the acid-test ratio for the company. (Enter your answers in millions, not in dollars. For example, $5,500,000 should be entered as 5.5.)

Question

Business

Tiara Russo

4 December, 16:24

Selected financial data regarding current assets and current liabilities for a company, a competitor in the cruise line industry, is provided: ($ in millions) Current assets: Cash and cash equivalents $ 307 Current investments 82 Net receivables 218 Inventory 122 Other current assets 138 Total current assets $ 867 Current liabilities: Accounts payable $ 1,165 Short-term debt 709 Other current liabilities 904 Total current liabilities $ 2,778 Required: 1. Calculate the current ratio and the acid-test ratio for the company. (Enter your answers in millions, not in dollars. For example, $5,500,000 should be entered as 5.5.)

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Answers (1)

Know the Answer?

Leland Cortez · Answer 1

0.31; 0.27

Explanation:

Given that,

Total current assets = $867

Inventory = $22

Total current liabilities = $2,778

Current ratio:

= Current assets : Current liabilities

= $867 : $ 2,778

= 0.31

Acid test ratio:

= (Current assets - Inventory) : Current liabilities

= ($867 - $122) : $ 2,778

= $745 : $2,778

= 0.27

Therefore, the current ratio and acid test ratio are 0.31 and 0.27, respectively.