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Shown below are selected data from the balance sheet of Bill's Auto Parts,a retail store (dollar amounts are in thousands):

-200 What is the quick ratio? (Round your answer to one decimal place. )
A)5.0%
B)1.5 to 1
C)20.0%
D)1.1 to 1

Question

[The following information applies to the questions displayed below.]
Shown below are selected data from the balance sheet of Bill's Auto Parts,a retail store (dollar amounts are in thousands):
 
-200 What is the quick ratio? (Round your answer to one decimal place. )
A)5.0% 
B)1.5 to 1 
C)20.0% 
D)1.1 to 1

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. It is calculated by dividing the company's liquid assets (excluding inventory) by its current liabilities. The ratio of 1.5 to 1 indicates that the company has 1.5 times more liquid assets than current liabilities, which is a healthy liquidity position.

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