A company has a current ratio of 2.0 and current assets of $550,000.It has cash of $50,000,short term investments of $150,000,accounts receivables of $50,000 and inventory of $300,000.What would be the quick ratio?
A)2.0
B)1.82
C)0.53
D).91

Question

Quizplus · Accepted Answer

The quick ratio is calculated by subtracting inventory from current assets and then dividing by current liabilities. Quick assets are $50,000 (cash) + $150,000 (short-term investments) + $50,000 (accounts receivables) = $250,000. Current liabilities are $550,000 / 2 = $275,000. Quick ratio = $250,000 / $275,000 = 0.91.

A Company Has a Current Ratio of 2