Content Integration Inc. has $25,000 in cash, $40,000 in short-term investments, $55,000 in net current receivables, and $12,000 in prepaid expenses. The total current liabilities of the firm are

Question

Quizplus · Accepted Answer

The quick ratio is calculated as (Cash + Short-term investments + Net current receivables) / Current liabilities. Here, it is ($25,000 + $40,000 + $55,000) / Current liabilities. Solving for the quick ratio of 0.63 gives the current liabilities as $120,000.