In: Accounting

# What is its acid-test (quick) ratio?

A company has cash of $100 million, accounts receivable of$600 million, current assets of $1.2 billion, accounts payable of$400 million, and current liabilities of $900 million. What is its acid-test (quick) ratio? ## Solutions ##### Expert Solution The acid-test or quick ratio is the ratio of the most liquid assets to current liabilities and provides an even more rigorous test of liquidity than the current ratio. The quick ratio excludes less liquid current assets from the numerator (e.g., prepaid expenses and inventory) and includes only such line items as cash and accounts receivable as provided in the problem. The quick ratio would be computed as follows: Cash$ 100

Accounts receivable 600

Quick assets \$ 700

Current liabilities ÷ 900

Quick ratio 0.78

The acid-test (quick) ratio is 0.78

## Related Solutions

##### What is the ratio of the crown's apparent weight (in water) Wapparent to its actual weight Wactual
Take the density of the crown to be $$\rho_{\mathrm{c}} .$$ What is the ratio of the crown's apparent weight (in water) $$W_{\text {apparent }}$$ to its actual weight $$W_{\text {actual }} ?$$ Express your answer in terms of the density of the crown $$\rho_{\mathrm{c}}$$ and the density of water $$\rho_{\mathrm{w}}$$ $$\frac{W_{\text {apparent }}}{W_{\text {actual }}}=1-\frac{\rho_{w}}{\rho_{c}}$$
##### What is its maximum speed?
The piston in the cylinder head of a locomotive has a stroke (twice the amplitude) of 1.0 m. If the piston moves with simple harmonic motion with an angular frequency of 200 rad/min, what is its maximum speed?
##### What is wellness and what are its five dimension?
Please elaborate the definition and wellness and specify things that needs to be done in order to improve each dimensions.
##### What is wellness and its five dimensions ?
Definition of wellness and statement of its dimensions with explanations.
##### What is wellness and its five dimensions ?
Defination of wellness and statement of its dimensions with explanations.
##### What is wellness and its five dimensions ?
Definition of wellness and statement of its dimensions with explanations.
##### Value of Stock and P/E Ratio
Castle-in-Sand generates a rate of return of $$20 \%$$ on its investments and maintains a plowback ratio of $$0.30 .$$ Its earnings this year will be $$\ 4$$ per share. Investors expect a $$12 \%$$ rate of return on the stock. Required: (a.) Find the price and $$\mathrm{P} / \mathrm{E}$$ ratio of the firm. (b.) What happens to the P/E ratio if the plowback ratio is reduced to 0.20? Why? (c.) Show that if plowback equals zero, the earnings-price ratio,...
##### Value of Stock and P/E Ratio
Castle-in-Sand generates a rate of return of  on its investments and maintains a plowback ratio of  Its earnings this year will be  per share. Investors expect a  rate of return on the stock. Required: (a.) Find the price and  ratio of the firm. (b.) What happens to the P/E ratio if the plowback ratio is reduced to 0.20? Why? (c.) Show that if plowback equals zero, the earnings-price ratio, E/P, falls to the expected rate of return on the stock.
##### Check that the ratio ke2/Gmemp is dimensionless.
Check that the ratio $$ke^2/Gm_em_p$$ is dimensionless. Look up a Table of Physical Constants and determine the value of this ratio. What does the ratio signify?
##### Which of these is NOT a product of the citric acid cycle?
Which of these is NOT a product of the citric acid cycle? CO2 FADH2 NADH + H+ acetyl CoA ATP