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Acid-test ratio

The following partial balance sheet ($ in thousands) for Paisano Seafood Inc. is shown below:

Current Assets
Cash - $60
Accounts receivable (net) - 170
Notes receivable - 50
Inventories - 200
Prepaid expenses - 25
Total current assets - 505
Plant assets (net) - 255

Total assets $760

Current Liabilities
Accounts payable - $240
Other liabilities - 80
Total current liabilities - 320
Long term liabilities - 110

Total liabilities - 430

Shareholders' equity
Capital Stock - 150
Retained Earnings - 180
Total shareholders' equity - 330

Total liabilities and equity - 760

What would the acid-test ratio be?

Solution Preview

The following partial balance sheet ($ in thousands) for Paisano Seafood Inc. is shown below:

Current Assets
Cash - $60
Accounts receivable (net) - 170
Notes ...

Solution Summary

Solution assists in estimating acid-test ratio

$2.19