Use the following information on current assets and current liabilities to compute and interpret the acidtest ratio.

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Use the following information on current assets and current liabilities to compute and interpret the acidtest ratio. Explain what the acid-test ratio of a company measures.

Cash . . . . . . . . . . . . . . . . . . $1,500 Prepaid expenses . . . . . . . . . . . . $ 700 Accounts receivable . . . . . . . 2,800 Accounts payable . . . . . . . . . . . . 5,750 Inventory . . . . . . . . . . . . . . . 6,000 Other current liabilities . . . . . . . 850/

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