Calculating the current ratio and the quick or acid-test


Question: Calculating the Current Ratio and the Quick (or Acid-Test) Ratio Chen Company has current assets equal to $3,500,000. Of these, $1,000,000 is cash, $2,000,000 is accounts receivable, $400,000 is inventory, and the remainder is marketable securities. Current liabilities total $2,000,000.

Required: 1. Calculate the current ratio.

2. Calculate the quick ratio (acid-test ratio).

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Accounting Basics: Calculating the current ratio and the quick or acid-test
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