Use the following information on current assets and current liabilities to compute and interpret the acid-test ratio. Explain what the acid- test ratio of a company measures.
Cash . . . . . . . . . . . . . . . . . . . . $ 1,490
Accounts receivable . . . . . . . . 2,800
Inventory . . . . . . . . . . . . . . . . 6,000
Prepaid expenses . . . . . . . . . . $ 700
Accounts payable . . . . . . . . . 5,750
Other current liabilities . . . . . 850