Mayfield Corporation has provided the following financial data: The company\'s a

Question

Mayfield Corporation has provided the following financial data:

The company's acid-test (quick) ratio is closest to:

1.90

1.85

2.65

1.81

Assets Current assets:     Cash $223,000     Accounts receivable 236,000     Inventory 202,000     Prepaid expenses       10,000 Total current assets 671,000 Plant and equipment, net      665,000 Total assets $1,336,000 Liabilities and Stockholders' Equity Current liabilities:       Accounts payable $156,000       Accrued liabilities 52,000       Notes payable, short term       45,000 Total current liabilities 253,000 Bonds payable      100,000 Total liabilities      353,000 Stockholders' equity:      Common stock, $4 par value 360,000      Additional paid-in capital-common stock 80,000      Retained earnings       543,000 Total stockholders' equity       983,000 Total liabilities & stockholders' equity $1,336,000

Explanation / Answer

1.81

Acid test ratio = (Current asset-inventories-prepaid expense)/Current liabilities Total current assets 671,000 Less: Inventory -202000 Prepaid expenses -10000 Net current asset 459,000 Current liabilties 253,000 Acid test ratio= 1.81

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