Tom's Toys has a cash balance of $80,000; temporary investments of $20,000; net receivables of $60,000; and inventory of $450,000.Tom's current liabilities total $200,000.His quick (acid test)ratio is:

Question

Quizplus · Accepted Answer

The quick ratio is calculated as (Cash + Temporary Investments + Net Receivables) / Current Liabilities. Here, it is ($80,000 + $20,000 + $60,000) / $200,000 = $160,000 / $200,000 = 0.80 to 1.

Tom's Toys Has a Cash Balance of $80,000; Temporary Investments