A company has $40,000 in cash, $75,000 in short- term investments, $263,000 in net current receivables, and $110,000 in inventory. The total current liabilities of the firm are $305,000. The quick ratio of the company is:

Question

Quizplus · Accepted Answer

The quick ratio is calculated as (Cash + Short-term investments + Net current receivables) / Current liabilities. Here, it is ($40,000 + $75,000 + $263,000) / $305,000 = $378,000 / $305,000 = 1.24.

A Company Has $40,000 in Cash, $75,000 in Short- Term