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Calculate the Acid-test ratio for Greg Company

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Reference no: EM132854896

Question - Information of Greg Manufacturing Company's balance sheet is as follows:

Current Assets Cash and cash equivalents 2,100,000

Marketable securities 7,200,000

Notes receivables 50,500,000

Finished goods 65,000,000

Unexpired insurance 950,000

Asset available for sale 50,000

Current liabilities Notes payable 1,400,000

Accounts payable 18,000,000

Accrued expenses 11,000,000

Income tax payable 600,000

Payment due within a year on loan 3,000,000

Required -

I. Calculate the Acid-test ratio for Greg Company and compare it with average industry ratio of 1.52.

II. What is the effect of the collection of notes receivables on the current ratio and net working capital?

Reference no: EM132854896

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