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S 13-6 Computing current ratio and acid-test ratio LO P3 Pritchett Co. reported the following year-end...

S 13-6 Computing current ratio and acid-test ratio LO P3

Pritchett Co. reported the following year-end data:

Cash $ 26,100
Short-term investments $ 9,100
Accounts receivable (current) $ 19,400
Inventory $ 27,900
Other current assets $ 15,000
Total current liabilities $ 39,000


Compute the (a) current ratio and (b) acid-test ratio.

Solutions

Expert Solution

Correct Answer:

Current ratio

2.50 Times

Acid test ratio

1.40 Times

Working:

A

Cash

$        26,100

B

Short-term investments

$          9,100

C

Accounts receivable (current)

$        19,400

D

Inventory

$        27,900

E

Other current assets

$        15,000

F=A+B+C+D+E

Total current assets

$        97,500

G

Total Current Liabilities

$        39,000

H=F/G

Current ratio

2.50

A

Cash

$        26,100

B

Short-term investments

$          9,100

C

Accounts receivable (current)

$        19,400

D=A+B+C

Quick assets

$        54,600

E

Total Current Liabilities

$        39,000

F=D/E

Acid test ratio

1.40

End of answer.

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ekkarill92 answered 2 years ago
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