Question

The financial statements of Denison Furniture Company include the following? items:

	2019	2018
Cash	? $60,500	? $55,000
Shortminus?term Investments	?28,000	?11,000
Net Accounts Receivable	? 98,000	?99,000
Merchandise Inventory	?164,000	?149,000
Total Assets	?533,000	?552,000
Total Current Liabilities	?233,000	?219,000
?Long-term Note Payable	?61,000	?54,000

What is the 2019 cash? ratio? (Round your answer to two decimal? places)

A.0.38

B.0.21

C.0.26

D.0.11

Answer 1

	Cash ratio
	formula:
	Cash & cash equivalents/current liabilities
	(60500)/233000
	0.259657
	answer option c)		$0.26
	(however much information is not given here about short
	term investment, so presumred it to be not highly liquid
	I have assumed it to be having a naturity value of more
	than three months and hence exluded from cash equivalent)