The Crafter Company had the following assets and liabilities as of December 31, 2012: Determine the quick ratio for the end of the year (rounded to one decimal point).
A) 6.7
B) 13.0
C) 4.2
D) 3.5

Question

The Crafter Company had the following assets and liabilities as of December 31, 2012:  Determine the quick ratio for the end of the year (rounded to one decimal point).
A) 6.7 
B) 13.0 
C) 4.2 
D) 3.5

Quizplus · Accepted Answer

The quick ratio, also known as acid-test ratio, is calculated as (cash + short-term investments + accounts receivable) / current liabilities. 
From the given assets and liabilities, we have: 
Quick assets = $15,000 + $10,000 + $25,000 = $50,000
Current liabilities = $12,000 
Quick ratio = Quick assets / Current liabilities = $50,000 / $12,000 ≈ 4.2 (rounded to one decimal point) 
Therefore, the best choice is C.

The Crafter Company Had the Following Assets and Liabilities as of December