Chapter 8, Problem 9QC

At year-end, Schultz, Inc. has cash of $11,600, current accounts receivable of $48,900, merchandise inventory of $37,900, and prepaid expenses totaling $5,100. Liabilities of $55,900 must be paid next year. What is Schultz’s acid-test ratio?

a. 1.08

b. 0.21

c. 1.76

d. Cannot be determined from the data given