The following balance sheet information is provided for Greene Company for Year 2: What is the company's quick (acid-test) ratio?
A) 0.7
B) 1.4
C) 1.3
D) 3.8

Question

The following balance sheet information is provided for Greene Company for Year 2:  What is the company's quick (acid-test) ratio?
A) 0.7 
B) 1.4 
C) 1.3 
D) 3.8

Quizplus · Accepted Answer

Quick ratio = Quick assets ÷ Current liabilities
Quick ratio = (Cash + Receivables + Current marketable securities) ÷ Current liabilities
Quick ratio = ($5,400 + $15,500 + $0) ÷ ($4,500 + $11,500) = $20,900 ÷ $16,000 = 1.3

The Following Balance Sheet Information Is Provided for Greene Company