ABC Company has current assets of $150,000 (of which $60,000 is inventory and prepaid expenses) and current liabilities of $50,000. Calculate: a. The current ratio b. The acid-test ratio c. If the company borrows $25,000 cash from a bank on a 90-day note, what will its current ratio be? d. What will the new acid-test ratio be?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter7: Analysis Of Financial Statements
Section: Chapter Questions
Problem 2P: Vigo Vacations has $200 million in total assets, $5 million in notes payable, and $25 million in...
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ABC Company has current assets of $150,000 (of which $60,000 is inventory and prepaid
expenses) and current liabilities of $50,000. Calculate:
a. The current ratio b. The acid-test ratio
c. If the company borrows $25,000 cash from a bank on a 90-day note, what will its current
ratio be?
d. What will the new acid-test ratio be?
Transcribed Image Text:ABC Company has current assets of $150,000 (of which $60,000 is inventory and prepaid expenses) and current liabilities of $50,000. Calculate: a. The current ratio b. The acid-test ratio c. If the company borrows $25,000 cash from a bank on a 90-day note, what will its current ratio be? d. What will the new acid-test ratio be?
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