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Hello,
Could, you, please, help me with this question 31.8 bpp page 143.
My answer is not the same as in a book. Acid test ratio formula =( current assets-inventory)/current liabilities…. But in book they calculated acid test ratio like a current ratio? I am not sure….
Thank you in advanced,
TatsianaThe answer in the book is correct!
If you ignore inventory then the only current asset is the receivables of 176,000.
The current liabilities are 61,000 + 79,000 = 140,000
Therefore the acid-test ratio is 176,000/140,000 = 1.26
(The current ratio would include inventory and would have been (176,000 + 20,000) / 140,000 = 1.40)
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