Sand Company Has an Acid-Test Ratio of 0

question 228

Multiple Choice

Sand Company has an acid-test ratio of 0.8. Which of the following actions would improve the acid-test ratio?

• A) Collect some accounts receivable.
• B) Acquire some inventory on account.
• C) Sell some equipment for cash.
• D) Use cash to pay off some accounts payable.

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Definitions:

Settle Price

The official price at the end of a trading session on a futures exchange, used for calculations of margin and account balances.

Option Premium

The price paid for the rights granted by an options contract, not considering the actual trading of the underlying asset.

June 550 Call

An options contract granting the holder the right, but not the obligation, to buy an underlying asset at a predetermined price of 550 units, expiring in June.

Gold

A precious metal that is used as an investment, a store of value, and in jewelry, due to its scarcity, durability, and aesthetic appeal.