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
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