Given the following information calculate the 2013 and 2014 acid-test ratios for Smart-T. :
Is Smart-T's liquidity situation improving?
Note: 2012 net accounts receivables = $40,000
Definitions:
Legal Entity
An organization or business that is recognized by law as having a distinct legal existence, separate from its owners.
Consolidation
The process of combining financial statements from several departments or subsidiaries into a unified set.
Merger
The combination of two or more companies into a single entity, where one survives and the others cease to exist as separate entities.
Synergy
A situation in which two companies operating together under one ownership perform better than the sum of their separate performances. A popular reason claimed for mergers.
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