hoe Ltd. has the following selected financial information at September 30, 2024 Cash $4290, Accounts Receivable $1300 Unearned Revenue $3980, curent assets of $40000, and current abilities of $43000 The company's acid-test ratio would be 0 0.801 0 0.931 O 0131 O 1401

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Ivanhoe Ltd. has the following selected financial information at September 30, 2024: Cash $4290, Accounts Receivable $1300
Unearned Revenue $3980, current assets of $40000, and current abilities of $43000. The company's acid-test ratio would be
Ⓒ 0.80:1
0 0.931
00131
O 1401
Transcribed Image Text:Ivanhoe Ltd. has the following selected financial information at September 30, 2024: Cash $4290, Accounts Receivable $1300 Unearned Revenue $3980, current assets of $40000, and current abilities of $43000. The company's acid-test ratio would be Ⓒ 0.80:1 0 0.931 00131 O 1401
Expert Solution
Step 1: Liquidity ratio and acid test ratio

The current ratio and acid test ratio are both part of liquidity ratio.. It indicates that the firm has a sufficient cash to pay out its current liabilities. The liquidity ratio can be calculated by dividing the liquid assets by current liabilities.The liquid assets are current assets except inventory and prepaid expenses.

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