A balance sheet shows Total Current Assets of 332 500 Cash of 57 000 Notes Receivable of 9500 Accounts Receivable of 161 500 and

Question

A balance sheet shows Total Current Assets of 332 500 Cash of 57 000 Notes Receivable of 9500 Accounts Receivable of 161 500 and Inventory of 104 500 Total Plant Assets of 38 000 Land of 19 000 Buildings of 9500 and Fixtures of 9500 and Current Liabilities of 190 000 Determine the Current Ratio the Acid Test Ratio and evaluate the health of the company The Current Ratio for the company is to 1 Round to the nearest hundredth The Acid Test Ratio isto 1 Round to the nearest hundredth By common rules of thumb A the Acid Test Ratio suggests good financial condition but the Current Ratio is too low B both ratios suggest the company may have difficulties OC both ratios indicate a healthy company

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