Lionworks Company has cash of $143,000;net Accounts Receivable of $89,000;short-term investments of $35,000 and prepaid expenses of $40,000.It also has $50,000 in current liabilities and $80,000 in long-term liabilities.The quick ratio for Lionworks Company is:

Question

Quizplus · Accepted Answer

The quick ratio is calculated by subtracting the inventories from current assets and then dividing by current liabilities. Since the problem does not provide information about inventories, we can assume that Lionworks Company does not have any. Thus, the quick assets are equal to cash, net accounts receivable, short-term investments, and prepaid expenses, which total $307,000 ($143,000 + $89,000 + $35,000 + $40,000). The quick ratio is therefore:

Quick ratio = (Quick assets) / (Current liabilities)
Quick ratio = $307,000 / $50,000
Quick ratio = 5.34

Therefore, the best choice is C) 5)34.

Lionworks Company Has Cash of $143,000;net Accounts Receivable of $89,000;short-Term