Westbury Pty Ltd has a current ratio of 2 to 1 and current liabilities of $22 000.If Westbury Pty Ltd has $10 000 of inventory,the quick asset ratio is:
A)1.6:1
B)2.5:1
C)1:1
D)1.2:1

Question

Quizplus · Accepted Answer

The quick asset ratio is calculated by subtracting inventory from current assets and then dividing by current liabilities. With a current ratio of 2:1, current assets are $44,000. Subtracting $10,000 of inventory leaves $34,000 in quick assets. Dividing $34,000 by $22,000 gives a quick asset ratio of 1.545:1, which rounds to 1.6:1.

Westbury Pty Ltd Has a Current Ratio of 2 to 1