A company had current assets of $550,000 and a current ratio of 2.0.The current assets consist of Cash of $50,000,Short-term investments of $150,000,Accounts receivable of $50,000,and Inventory of $300,000.Which of the following is closest to the company's quick ratio?
A)2.0
B)1.82
C)0.53
D)0.91

Question

Quizplus · Accepted Answer

The quick ratio is calculated as (Current Assets - Inventory) / Current Liabilities. Current liabilities can be found by dividing current assets by the current ratio: $550,000 / 2 = $275,000. Quick assets (Cash + Short-term investments + Accounts receivable) = $50,000 + $150,000 + $50,000 = $250,000. Quick ratio = $250,000 / $275,000 ≈ 0.91.

A Company Had Current Assets of $550,000 and a Current