Response to the following problem:
Compute the current ratio and acid-test ratio for each of the following separate cases. (Round ratios to two decimals.) Which company case is in the best position to meet short-term obligations? Explain.
Case A Case B Case C
Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 800 $ 510 $3,200
Short-term investments . . . . . . . . 0 0 1,100
Current receivables . . . . . . . . . . . . 0 790 800
Inventory . . . . . . . . . . . . . . . . . . . . 2,000 1,600 1,900
Prepaid expenses . . . . . . . . . . . . . . 1,200 600 300
Total current assets . . . . . . . . . . . . $4,000 $3,500 $7,300
Current liabilities . . . . . . . . . . . . . . $2,200 $1,100 $3,650