Concept Introduction:
The ratio that measures the efficiency of the company to meet its current or short-term liabilities with the current assets refers to the Current Ratio. Cash, cash equivalents and other securities that can be easily converted into cash in the short term are current assets.
Requirement 1:
To Calculate:
The current ratio of Pritchett Co. to measure the liquidity of the company
Concept Introduction:
Acid-test Ratio:
The ratio that measures the capacity of the company to meet its current liabilities with the available cash or quick assets refers to Acid-test ratio. This is also refers to quick ratio and inventory is excluded while calculating the ratio as they might not turn to cash quickly.
Requirement 2:
To Calculate:
The acid-test ratio of Pritchett Co. to measure the capability of the company in meeting its short term financial obligations.

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Chapter 17 Solutions
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