17
May
May
Lipstick Corporation has current assets of $11,400, inventories of $4,000, and a currrent ratio of 2.6.
a.) 1.69
b.) 0.54
c.) 0.74
d.) 1.35
Please explain your answer
Answer:
Current assets/Current liabilities = Current ratio
$11,400/CL = 2.6
(Current assets - Inventories)/Current liabs = Acid test ratio
$7,400/CL = ?
? = 7400/11400 x 2.6 = 1.69 - Answer a
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