Question

Based on the following data, what is the quick ratio, rounded to one decimal point? Accounts payable $ 30,000 Accounts receivable 60,000 Accrued liabilities 5,000 Cash 30,000 Intangible assets 50,000 Inventory 69,000 Long-term investments 80,000 Long-term liabilities 100,000 Marketable securities 30,000 Fixed assets 670,000 Prepaid expenses 1,000 3.0 1.8 2.2 3.4

Answer 1

Answer: 3.4

Explanation:

The Quick ratio is calculated by Dividing Quick Assets by the current Liabilities.

Quick Assets are current assets that are either cash or cash equivalents.

That includes Account Payables, Cash and Marketable securities.

Adding them up,

= 60,000 + 30,000 + 30,000

= $120,000

The Current Liabilities are,

= Accounts Payable + Accrued Liability.

= 30,000 + 5,000

= $35,000

Quick Ratio = Quick Assets / Current Liabilities

Quick ratio= 120,000/ 35,000

Quick Ratio = 3.43

Quick Ratio is 3.4.