Refer to the figure above. Tew's quick ratio is
A) 1.5:1
B) 1:1
C) 2:1
D) none of these

Question

Quizplus · Accepted Answer

The quick ratio is calculated by excluding inventory from the current assets. From the figure, Tew has $10,000 in current assets, but $6,000 of that is inventory. Therefore, the quick assets are $4,000 ($10,000 - $6,000). The quick ratio is then calculated as follows:
Quick Ratio = Quick Assets / Current Liabilities
Quick Ratio = $4,000 / $4,000
Quick Ratio = 1:1
Therefore, the best choice is B.

Refer to the Figure Above