Question

se the below information to answer the following question. Income Statement For the Year Net sales $631,000 COGS 442,220 Depreciation 28,100 EBIT $160,700 Interest 14,900 Taxable income $145,800 Taxes 49,600 Net income $96,200 Balance Sheet Beginning of Year End of Year Cash $38,200 $43,700 Accounts receivable 91,400 86,150 Inventory 203,900 214,600 Net fixed assets 516,100 537,950 Total assets $849,600 $882,400 Accounts payable $136,100 $104,300 Long-term debt 329,500 298,200 Common stock ($1 par value) 75,000 82,000 Retained earnings 309,000 397,900 Total Liab. & Equity $849,600 $882,400 What is the quick ratio at the end of the year?

Answer 1

Answer:

The quick ratio is 1.30

Explanation:

For Quick ratio Ending year data of Balance sheet will use.

Quick Ratio = Total Liquid Assets / Total Current liabilities

Total Liquid Assets = Cash + Accounts Receivable = 43700 + 91400 = 135100

Total Current Current Liabilities = Accounts Payable = 104300

Quick ratio = 135100 / 104300 = 1.30 answer round to two decimal places.

The ratio indicates that corporation has 1.30 quick assets to pay off their current liabilities. It shows good position of corporation. The ratio outcome shows corporation has strong short term solvency position hence corporation has strong liquidity position.