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

To calculate the quick ratio, we need to subtract the inventories from the current assets and then divide it by the current liabilities. 
Quick Ratio = (Cash + Accounts Receivable + Marketable Securities) / Current Liabilities
Quick Ratio = (900 + 1,200 + 1,100) / 700
Quick Ratio = 4.2
Therefore, the quick ratio for the end of the year is 4.2, and the best choice is C.

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