   Chapter 8, Problem 17MCQ ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

#### Solutions

Chapter
Section ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
1 views

# How is the cash ratio calculated?a. Current Assets/Current Liabilitiesb. Cash Flows from Operating Activities/Current Liabilitiesc. (Cash + Marketable Securities)/Current Liabilitiesd. (Cash + Marketable Securities + Accounts Receivable)/Current Liabilities

To determine

Concept introduction:

Cash ratio:

Cash ratio is calculated by dividing and cash and cash equivalents by the total current liabilities. The formula for Cash ratio is as follows:

Cash Ratio = Cash and cash equivalents/ Current liabilities

To choose:

The correct option for calculation of Cash ratio.

Explanation

Cash ratio is calculated by dividing and cash and cash equivalents by the total current liabilities. Hence the correct option is c.

a. Cash ratio is calculated by dividing and cash and cash equivalents by the total current liabilities...

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