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 is calculated by subtracting inventories from current assets and dividing the result by current liabilities. The Crafter Company's quick assets are $300,000 ($200,000 + $50,000 + $50,000) and its current liabilities are $71,429 ($36,429 + $35,000). Therefore, the quick ratio is 4.2 ($300,000/$71,429), rounded to one decimal point.

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