Shown below are selected data from the balance sheet of Bill's Auto Parts, a retail store (dollar amounts are in thousands):
$$\begin{array} { | l | r | }
\hline \text { Cash } & \$ 130 \
\hline \text { Accounts receivable } & \$ 370 \
\hline \text { Inventory } & \$ 400 \
\hline \text { Total assets } & \$ 1,260 \
\hline \text { Current liabilities } & \$ 340 \
\hline \text { Non current liabilities } & \$ 280 \
\hline
\end{array}$$
-Refer to the above data. What is the quick ratio?
A) 5%.
B) 1.5 to 1.
C) 20%.
D) Some other amount.

Question

Shown below are selected data from the balance sheet of Bill's Auto Parts, a retail store (dollar amounts are in thousands):
$$\begin{array} { | l | r | } 
\hline \text { Cash } & \$ 130 \
\hline \text { Accounts receivable } & \$ 370 \
\hline \text { Inventory } & \$ 400 \
\hline \text { Total assets } & \$ 1,260 \
\hline \text { Current liabilities } & \$ 340 \
\hline \text { Non current liabilities } & \$ 280 \
\hline
\end{array}$$
-Refer to the above data. What is the quick ratio?
A) 5%.
B) 1.5 to 1.
C) 20%.
D) Some other amount.

Quizplus · Accepted Answer

The quick ratio is calculated as (Cash + Accounts receivable) / Current liabilities. In this case, the quick ratio is ($130 + $370) / $340 = 1.5 to 1.

Shown Below Are Selected Data from the Balance Sheet of Bill's