Fernvale Pty Ltd has a current ratio of 2:1 with total current liabilities of $30 000.If Fernvale Pty Ltd's inventory is $7 500,the quick ratio is:
A) 2.67:1
B) 1.75:1
C) 2.25:1
D) 1.6:1

Question

Quizplus · Accepted Answer

The quick ratio is calculated by subtracting inventory from current assets and then dividing by current liabilities. With a current ratio of 2:1 and current liabilities of $30,000, current assets are $60,000. Subtracting inventory ($7,500) from current assets gives $52,500. Dividing $52,500 by current liabilities ($30,000) gives a quick ratio of 1.75:1.

Fernvale Pty Ltd Has a Current Ratio of 2:1 with Total