Asked by Alayna Garcia on Jul 27, 2024
Verified
The cash ratio is closest to:
A) 1.14
B) 0.95
C) 0.38
D) 0.36
Cash Ratio
A liquidity ratio that measures a company's ability to repay short-term obligations with cash and cash equivalents alone.
- Differentiate between the differences and significances in liquidity indices such as current, quick, and cash ratios.
Verified Answer
KS
Kealee SherbetJul 29, 2024
Final Answer :
C
Explanation :
Cash Ratio = (Cash + Marketable Securities) / Current Liabilities
= ($15,000 + $30,000) / $100,000
= $45,000 / $100,000
= 0.45
The closest answer choice to 0.45 is C) 0.38.
= ($15,000 + $30,000) / $100,000
= $45,000 / $100,000
= 0.45
The closest answer choice to 0.45 is C) 0.38.
Learning Objectives
- Differentiate between the differences and significances in liquidity indices such as current, quick, and cash ratios.
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