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Airline Accessories has the following current assets: cash, $99 million; receivables, $91 million; inventory, $179 million; and other current assets, $15 million. Airline Accessories has the following liabilities: accounts payable, $92 million; current portion of long-term debt, $32 million; and long-term debt, $20 million. Based on these amounts, calculate the current ratio and the acid-test ratio for Airline Accessories.

Answer :

Answer:

3.10; 1.53

Explanation:

Total  Current Assets:

= Cash + Receivables + Inventory + Other Current Assets

= $99 + $91 + $179 + $15

= $384 million

Total Current Liabilities:

= Accounts Payable + current portion of long-term debt

= $92 + $32

= $124 million

Current Ratio:

= Total Current Assets ÷ Total Current Liabilities

= $ 384 ÷ $ 124

= 3.10

Acid Test Ratio:

= (Cash + Accounts Receivables ) ÷ Current Liabilities

= $(99 + 91) ÷ $124

= 1.53

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