Canadian Bacon Inc. financial statements are presented in the table below.
Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, calculate the firm’s acid-test ratio (quick ratio).
Round the answers to two decimal places
Balance Sheet December 31, 2014
| Cash and marketable securities | $132,000 | Accounts payable | $399,000 |
| Accounts receivable | $311,000 | Notes payable | $98,500 |
| Inventories | $512,000 | Accrued expenses | $89,300 |
| Prepaid expenses | $11,300 | Total current liabilities | $586,800 |
| Total current assets | $966,300 | Long-term debt | $799,400 |
| Gross fixed assets | $2,104,000 | Par value and paid-in-capital | $298,000 |
| Less: accumulated depreciation | $398,000 | Retained Earnings | $988,100 |
| Net fixed assets | $1,706,000 | Common Equity | 1,286,100 |
| Total assets | $2,672,300 | Total liabilities and owner’s equity | $2,672,300 |
Income Statement, Year of 2014
| Net sales (all credit) | $4,276,600.00 |
| Less: Cost of goods sold | $3,292,982.00 |
| Selling and administrative expenses | $349,000.00 |
| Depreciation expense | $148,000.00 |
| EBIT | $486,618.00 |
| Interest expense | $49,600.00 |
| Earnings before taxes | $437,018.00 |
| Income taxes | $174,807.20 |
| Net income | $262,210.80 |
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