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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),
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 is to 1. (Round to the nearest hundredth.) By common rules of thumb. OA. 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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