The following financial data have been taken from the records of CPZ Enterprises

Question

The following financial data have been taken from the records of CPZ Enterprises.

Accounts Recievable................................................$200,000
Accounts payable.....................................................$80,000
Bonds payable, due in 10 years....................................$300,000
Cash...................................................................$100,000
Interest payable, due in three months.............................$10,000
Inventory..............................................................$440,000
Land....................................................................$250,000
Notes payable, due in six months....................................$50,000

What is the company's acid-test ratio?
a. 0.68 b. 1.68 c. 2.14 d. 2.31

Explanation / Answer

(100,000+200,000)/(80,000+50,000+10,000)= 2.14 (c)

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