Question

Pritchett Co. reported the following year-end data: Cash $ 20,000 Short-term investments $ 8,400 Accounts receivable...

Pritchett Co. reported the following year-end data: Cash $ 20,000 Short-term investments $ 8,400 Accounts receivable (current) $ 14,800 Inventory $ 17,600 Other current assets $ 6,700 Total current liabilities $ 27,000 Compute the (a) current ratio and (b) acid-test ratio.

Compute the acid-test ratio.

Compute the current ratio.
Current Ratio
Choose Numerator: / Choose Denominator: = Current Ratio
/ = Current ratio
/ = to 1
Acid-Test Ratio
Choose Numerator: / Choose Denominator: = Acid-Test Ratio
+ + / = Acid-test ratio
+ + / = to 1
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans:

1. Current Ratio: Current Asset / Current Liabilities

Cash : $20,000

Short term investment : $8,400

Account receivable : $14,800

Inventory : $17,600

Other current assets : $6,700

Current Assets : $20,000 + $8,400 + $14,800 + $17,600 + 6,700 = $67,500

Current Liability : $27,000

Current Ratio : $67,500 / $27,000 = 2.5

b.

Acid Test Ratio :

(Current Asset - Inventory) / Current liabilty:

($67,500 - $17,600) / $27,000 = 1.85

For any query please ask in comment box, we are happy to help you. Also please don't forget to provide your valuable feedback. Thanks!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Q1. ALPHA Company reported the following year-end information: Cash $ 52,000 Short-term investments 12,000 Accounts receivable...
Q1. ALPHA Company reported the following year-end information: Cash $ 52,000 Short-term investments 12,000 Accounts receivable 54,000 Inventory 325,000 Prepaid expenses 17,500 Accounts payable 106,500 Other current payables 25,000 Instructions: 1- Explain the purpose of the acid-test ratio. 2- Calculate the acid-test ratio for ALPHA Company.
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet...
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $51,900; total assets, $179,400; common stock, $85,000; and retained earnings, $48,534.) CABOT CORPORATION Income Statement For Year Ended December 31, 2017 Sales $ 451,600 Cost of goods sold 297,250 Gross profit 154,350 Operating expenses 98,600 Interest expense 4,900 Income before taxes 50,850 Income taxes 20,484 Net income $ 30,366 CABOT CORPORATION Balance Sheet December 31, 2017 Assets...
The Blue Company has provided the following account balances: Cash $380,000 Short-term investments $40,000 Accounts receivable...
The Blue Company has provided the following account balances: Cash $380,000 Short-term investments $40,000 Accounts receivable $60,000 Inventory $480,000 Long-term notes receivable $20,000 Equipment $960,000 Factory Building $1,800,000 Intangible assets $60,000 Accounts payable $300,000 Accrued liabilities payable $40,000 Short-term notes payable $95,000 Income taxes payable $55,000 Long-term notes payable $920,000 Stockholders’ equity $2,400,000 What is Blue's current ratio?
The balance sheet for Shaver Corporation reported the following: cash, $12,500; short-term investments, $17,500; net accounts...
The balance sheet for Shaver Corporation reported the following: cash, $12,500; short-term investments, $17,500; net accounts receivable, $50,000; inventories, $55,000; prepaids, $17,500; equipment, $103,000; current liabilities, $55,000; notes payable (long-term), $85,000; total stockholders’ equity, $115,500; net income, $4,820; interest expense, $7,400; income before income taxes, $9,780. Compute Shaver’s debt-to-assets ratio and times interest earned ratio.
Presented below is information available for Sunland Company. Current Assets Cash $ 3700 Short-term investments 57300...
Presented below is information available for Sunland Company. Current Assets Cash $ 3700 Short-term investments 57300 Accounts receivable 57000 Inventory 120000 Prepaid expenses 31000 Total current assets $ 269000 Total current liabilities are $50000. The acid-test ratio for Sunland is: 1.22 to 1, 5.38 to 1, 4.76 to 1, 2.36 to 1
At the end of​ 2015, Apple had cash and​ short-term investments of $41.77 ​billion, accounts receivable...
At the end of​ 2015, Apple had cash and​ short-term investments of $41.77 ​billion, accounts receivable of $35.79 billion, current assets of $89.87 ​billion, and current liabilities of $80.89 billion. a. What was​ Apple's current​ ratio? b. What was​ Apple's quick​ ratio? c. What was​ Apple's cash​ ratio? d. At the end of​ 2015, HPQ had a cash ratio of 0.44​, a quick ratio of 0.79 and a current ratio of 1.11. What can you say about the asset liquidity...
Problem 17-4A Calculation of financial statement ratios LO P3 Selected year-end financial statements of Cabot Corporation...
Problem 17-4A Calculation of financial statement ratios LO P3 Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $56,900; total assets, $249,400; common stock, $81,000; and retained earnings, $51,308.) CABOT CORPORATION Income Statement For Year Ended December 31, 2017 Sales $ 453,600 Cost of goods sold 298,350 Gross profit 155,250 Operating expenses 99,000 Interest expense 4,100 Income before taxes 52,150 Income taxes 21,008 Net income $...
Spartan Sportswear's current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data...
Spartan Sportswear's current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data were abstracted from a recent financial statement: Inventories $ 180,000 Total assets $ 840,000 Current ratio 3.50 Acid-test ratio 2.00 Debt to equity ratio 1.80 Required: Compute the long-term liabilities for Spartan:
Bronco Electronics' current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data...
Bronco Electronics' current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data were abstracted from a recent financial statement: Inventories $ 170,000 Total assets $ 1,850,000 Current ratio 4.2 Acid-test ratio 3.20 Debt to equity ratio 1.5 Required: Compute the long-term liabilities for Bronco:
Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs...
Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 35,985 $ 42,063 $ 42,114 Accounts receivable, net 89,700 62,100 52,000 Merchandise inventory 112,000 84,500 56,000 Prepaid expenses 11,588 11,041 4,679 Plant assets, net 342,870 310,764 258,207 Total assets $ 592,143 $ 510,468 $ 413,000 Liabilities and Equity Accounts payable $ 151,867 $ 88,857 $ 56,151 Long-term notes payable secured by mortgages on plant assets 114,663 120,930 94,011 Common stock,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT