Question

You are evaluating the balance sheet for SophieLex’s Corporation. From the balance sheet you find the following balanc...


You are evaluating the balance sheet for SophieLex’s Corporation. From the balance sheet you find the following balances: cash and marketable securities = $280,000; accounts receivable = $1,380,000; inventory = $2,280,000; accrued wages and taxes = $590,000; accounts payable = $890,000; and notes payable = $780,000.

 

What is the quick ratio (round your answer to 2 decimal places

 

Answer

Introduction;-

quick ratio, also known as the acid-test ratio.it indicates that company's ability to meet its short-term obligations with its most liquid assets.

Explanation:-

Quick ratio

=Current assets - Inventory /current liabilities

=$3,940,000-$2,280,000/$2,260,000

=0.73

Note:-

Current assets

=cash and marketable securities+ accounts receivable + Inventory

=$280,000 + $1,380,000 +$2,280,000

=$3,940,000

Current liabilities

wages and taxes +accounts payable+notes payable

= $590,000 + $890,000 + $780,000

=$2,260,000

 

Conclusion:-

Quick ratio is 0.73

Recent Questions