13 The financial statements of Clear water Furniture Company

13) The financial statements of Clear water Furniture Company include the following items: 2017 2016 Cash Short-term Investments Net Accounts Receivable Merchandise Inventory Total Assets Total Current Liabilities Long-term Note Payable $54,500 26,000 97,000 156,000 525,000 230,000 $48,000 10,000 106,000 145,000 546,000 213,000 55,000 60,000 What is 2017 cash ratio? (Round your answer to two decimal places) A) 0.19 B) 0.10 C) 0.35 D) 0.24

Solution

Answer is D.

Cash = $54,500
Total Current Liabilities = $230,000

Cash Ratio = Cash / Total Current Liabilities
Cash Ratio = $54,500 / $230,000
Cash Ratio = 0.24