Sheldon Shoes Ltd Which of the Following Best Interprets Sheldon Shoe's Acid-Test Ratio

question 30

Multiple Choice

Sheldon Shoes Ltd. has provided you with the following selected information from 2020 and 2021: $\begin{array}{lrr}&\underline{2021} & \underline{2020}\\\text { Cash } & \$ 15,500 & \$ 10,200 \\\text { Accounts receivable } & 18,000 & 22,000 \\\text { Short-term investments } & 30,000 & 60,000 \\\text { Inventory } & 29,000 & 38,500 \\\text { Total current assets } & 92,500 & 130,700 \\\text { Total current liabilities } & 101,000 & 122,000\end{array}$ Which of the following best interprets Sheldon Shoe's acid-test ratio analysis?

• A) Acid-test ratio has improved compared to prior year, increasing from 0.9 to 1.1.
• B) Acid-test ratio has weakened compared to prior year, decreasing from 0.8 to 0.6.
• C) Acid-test ratio has weakened compared to prior year, decreasing from 1.1 to 0.9.
• D) Acid-test ratio has improved compared to prior year, increasing from 0.6 to 1.8.

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Definitions:

Operational Plans

Detailed plans outlining how the strategic goals of an organization will be achieved through specific actions within a short to medium timeframe.

Facilities Plan

A strategic plan that outlines the physical resources, spaces, and environments necessary for an organization to operate efficiently.

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The planned arrangement of elements in a space, such as equipment and stations in a factory, to optimize operations and workflows.

Human Resource Plans

Strategic documents that outline how a company intends to meet its current and future HR needs through the management of its workforce.