The financial statements for Stephens' Electric Company include the following items
2017 2016
Cash $55,000 $51,000
Cash Equivalents 23,500 20,000
Net Accounts Receivable 30,000 26,000
Merchandise Inventory 81,000 65,000
Total Assets 530,000 548,000
Accounts Payable44,500 35,000
Salaries Payable 24,000 20,000
Long-term Note Payable 61,000 57,000
Income From Operations 124,500 115,000
Interest Expense 28,000 33,000
Compute the 2016 cash ratio. (Round your answer to two decimal places.)
A) 1.29
B) 1.15
C) 2.03
D) 0.63
A .A)
Cash ratio = (Cash + Cash equivalents) / Total current liabilities
Cash ratio = ($51,000 + $20,000 ) / ($35,000 + $20,000 )
Cash ratio = $71,000 / $55,000
Cash ratio = 1.29
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