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25 - Current assets of an enterprise are 1.200.000 TL, stocks are 200.000 TL and short-term liabilities are 250,000 TL. According to these data, what is the Acid-test rate of this business?    a) 2nd  B) 3  NS) 4  D) None  TO)  one

25 - Current assets of an enterprise are 1.200.000 TL, stocks are 200.000 TL and short-term liabilities are 250,000 TL. According to these data, what is the Acid-test rate of this business?    a) 2nd  B) 3  NS) 4  D) None  TO)  one

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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25 -

Current assets of an enterprise are 1.200.000 TL, stocks are 200.000 TL and short-term liabilities are 250,000 TL. According to these data, what is the Acid-test rate of this business?

  
 a)

2nd
 B)

3
 NS)

4
 D)

None
 TO)

 one
Expert Solution
Step 1 Formula to calculate the acid test ratio

We know that Acid Test ratio = (Current Assets - Inventory)/Current liabilities 

Acid test ratio determines how quickly an entity can pay off its current liabilities using readily available and highly liquid assets. 

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