A company had the following current assets and current liabilities: $$\begin{array} { l r }
\text { Cash } & \$ 5,000 \
\text { FVTOCI securities } & 15,000 \
\text { Accounts receivable } & 75,000 \
\text { Inventory } & 32,500 \
\text { Prepaid insurance } & 2,500 \
\text { Accounts payable } & 18,500 \
\text { Unearned revenue } & 20,000 \
\text { Current portion of long-term debt } & 5,000
\end{array}$$ What is their quick ratio closest to?
A)2.2
B)2.5
C)3.0
D)3.4

Question

A company had the following current assets and current liabilities: $$\begin{array} { l r } 
\text { Cash } & \$ 5,000 \
\text { FVTOCI securities } & 15,000 \
\text { Accounts receivable } & 75,000 \
\text { Inventory } & 32,500 \
\text { Prepaid insurance } & 2,500 \
\text { Accounts payable } & 18,500 \
\text { Unearned revenue } & 20,000 \
\text { Current portion of long-term debt } & 5,000
\end{array}$$ What is their quick ratio closest to?
A)2.2
B)2.5
C)3.0
D)3.4

Quizplus · Accepted Answer

The quick ratio is calculated as (Cash + FVTOCI securities + Accounts receivable) / Current Liabilities. Here, it's ($5,000 + $15,000 + $75,000) / ($18,500 + $20,000 + $5,000) = $95,000 / $43,500 ≈ 2.2.

A Company Had the Following Current Assets and Current Liabilities