If a Company Has an Acid Test Ratio of 1

question 21

Multiple Choice

If a company has an acid test ratio of 1.00,$5 million in inventory,and $10 million in current liabilities,what are its total current assets?

• A)$5 million
• B)$10 million
• C)$15 million
• D)$20 million

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Definitions:

Dividend Income

Income received by shareholders from the profits distributed by a company, usually in the form of cash payments.

Net Loss

The amount by which expenses exceed revenues.

Net Income

The amount of money remaining after all operating expenses, taxes, and dividends have been subtracted from total revenue.

Fair Value

An estimate of the price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.