Standard Brakes had sales of $200,000 last year. It also has a cash total of $75,000, stocks and bonds of $50,000, and accounts receivable of $40,000. Standard has accounts payable of $50,000, notes payable of $125,000, and bonds payable of $175,000. Calculate the quick ratio for the company.
A) .47
B) 1.04
C) 1.22
D) 1.14
E) .94

Question

Quizplus · Accepted Answer

The quick ratio is calculated as (Cash + Accounts Receivable) / Current Liabilities. Here, (75,000 + 40,000) / (50,000 + 125,000) = 115,000 / 175,000 = 0.657, which rounds to 0.94.

Standard Brakes Had Sales of $200,000 Last Year