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Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger
Edition 4ISBN: 978-0324380767Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger
Edition 4ISBN: 978-0324380767 Exercise 36
Calculating the Current Ratio and the Quick (or Acid-Test) Ratio
Chen Company has current assets equal to $3,500,000. Of these, $1,000,000 is cash, $2,000,000 is accounts receivable, $400,000 is inventory, and the remainder is marketable securities. Current liabilities total $2,000,000.
Required:
Note: Round answers to one decimal place.
1. Calculate the current ratio.
2. Calculate the quick ratio (acid-test ratio).
Chen Company has current assets equal to $3,500,000. Of these, $1,000,000 is cash, $2,000,000 is accounts receivable, $400,000 is inventory, and the remainder is marketable securities. Current liabilities total $2,000,000.
Required:
Note: Round answers to one decimal place.
1. Calculate the current ratio.
2. Calculate the quick ratio (acid-test ratio).
Explanation
Verified
Verified
1) Current ratio:
Current ratio indicat...
Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger
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