If a company has an acid test ratio of 1.00,$5 million in inventory,and $10 million in current liabilities,what are its total current assets?
A) $5 million
B) $10 million
C) $15 million
D) $20 million

Basically, the acid test ratio is an accounting ratio which tells whether a company has enough current assets to cover their short-term debt obligations.

For instance, the acid test ratio calculation is equals to 1, then, the company will have to be careful because it is at the verge of getting below 1 which indicates inability to fully cover short term debt.

Now, the inventory in the question is treated as Current asset under the balance sheet.

Therefore, the Option A. is correct because the Inventory equals the Total current assets which is $5 million.

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If a company has an acid test ratio of 1.00,$5 million in inventory,and $10 million in current liabilities,what are its total current assets? A) $5 million B) $10 million C) $15 million D) $20 million

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If a company has an acid test ratio of 1.00,$5 million in inventory,and $10 million in current liabilities,what are its total current assets?
A) $5 million
B) $10 million
C) $15 million
D) $20 million