Question

What is the quick ratio of a company that has a balance sheet showing cash of $120,000, accounts receivable of $80,000, inventories of $125,000, accounts payable of $140,000, and owner's capital of $185,000

Answer 1

Answer:

the quick ratio is 1.4 times

Explanation:

The computation of the quick ratio is given below:

Quick ratio is

= (Cash + Accounts receivables) ÷Current liabilities

= ($120,000 + $80,000) ÷ $140,000

= 1.4 times

hence, the quick ratio is 1.4 times

The same should be considered and relevant