   Chapter 9, Problem 9.4.3P

Chapter
Section
Textbook Problem

Twenty metrics of liquidity, solvency, and profitabilityThe comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8   InstructionsQuick ratio To determine Concept Introduction: Acid test ratio: Acid test ratio is also called Quick ratio. This ratio is calculated by dividing the quick assets (Cash, Cash equivalents, Short term investments and current receivables) by total current liabilities for the year. The formula for Acid test ratio is as follows: Acid test ratio = (Cash + Cash equivalents + Short term investments + Accounts receivables) Current Liabilities To Calculate: The Quick Ratio. Explanation The Quick Ratio is calculated as follows:  20Y8 20Y7 Total Current Assets$ 3,690,000 $3,089,000 Less: Inventories$ (1,190,000) \$ (950,000)

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