Kingsbury Associates has current assets as follows:
If Kingsbury has a current ratio of 3.2,what is its quick ratio?
A)2.07
B)1.55
C)0.48
D)0.96

Question

Kingsbury Associates has current assets as follows: 
If Kingsbury has a current ratio of 3.2,what is its quick ratio?
A)2.07 
B)1.55 
C)0.48 
D)0.96

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. If the current ratio is 3.2, then we can assume that the current liabilities are 1/3.2 (or 0.3125) of the current assets. 
To find the quick ratio, we need to subtract the inventory (part of current assets) from the current assets and then divide by the current liabilities. 
Quick Ratio = (Current Assets - Inventory) / Current Liabilities
Using the information given, we can calculate:
Quick Ratio = (11,8586 - $2,762) / (11,8586 x 0.3125) = 1.55
Therefore, the best choice is B) 1.55.

Kingsbury Associates Has Current Assets as Follows