The Metro Construction Company Had the Following Financial Data as of December

Essay

The Metro Construction Company had the following financial data as of December 31,2018:
$$\begin{array} { | l | r | } \hline \text { Cash } & \$ 90,000 \\\hline \text { Cash Equivalents } & 30,000 \\\hline \text { Accounts Receivable } & 55,000 \\\hline \text { Total current liabilities } & 80,000 \\\hline\end{array}$$ Cash and cash equivalents $\quad \$ 120,000$
Total current liabilities $\quad 80,000$
a.What is the cash ratio as of December 31,2018? Show the formula and your computations.
b.Comment on the cash ratio for Metro Construction Company.