Donny Dell Inc. had a days in inventory (based on 365 days) of 5. Cost of goods sold were $4,526. Net working capital was $70 and total current assets were $400. What is Donny Dell's quick ratio?
A) 11.315.
B) 1.024.
C) 4.829.
D) 14.00.

Question

Quizplus · Accepted Answer

The quick ratio is calculated as (Current Assets - Inventory) / Current Liabilities. First, find the inventory: Days in Inventory = 365 / Inventory Turnover, where Inventory Turnover = COGS / Inventory. Solving for Inventory gives Inventory = (COGS / (365 / Days in Inventory)) = $62. Then, Quick Ratio = (400 - 62) / (400 - 70) = 1.024.