How can the acid-test ratio of a casino business be calculated?

[Julio88]

The acid-test ratio can be calculated for a casino business by dividing the company's quick assets by its current liabilities. Quick assets include cash, cash equivalents, and accounts receivable. Current liabilities include any debts or obligations that are due within the next year.

Here is the formula for calculating the acid-test ratio:

Acid-Test Ratio = (Cash + Cash Equivalents + Accounts Receivable) / Current Liabilities

For example, let's say a casino business has $100,000 in cash, $50,000 in cash equivalents, and $75,000 in accounts receivable. It also has $150,000 in current liabilities, which includes payments due to suppliers and other expenses due in the next year.

The acid-test ratio for this casino business would be:

Acid-Test Ratio = ($100,000 + $50,000 + $75,000) / $150,000 Acid-Test Ratio = $225,000 / $150,000 Acid-Test Ratio = 1.5

Therefore, the acid-test ratio for this casino business is 1.5. This means that the casino has $1.50 in quick assets (cash, cash equivalents, and accounts receivable) to cover each dollar of current liabilities.

 

[Crazy_winner]

The totals for cash, short-term investments, and accounts receivable should be added together. These are the most easily convertible assets into cash that the casino has. Divide the sum of the liquid assets by the sum of the current liabilities.