A company has $23,000 in cash and cash equivalents,$81,000 in short-term investments,$120,000 in net current receivables,$55,000 in inventory,$10,000 of prepaid insurance and $5,000 of supplies.The total current liabilities of the firm are $298,000.The quick ratio of the company is:

Question

Quizplus · Accepted Answer

The quick ratio is calculated as (Cash and Cash Equivalents + Short-term Investments + Net Current Receivables) / Current Liabilities. Here, it is ($23,000 + $81,000 + $120,000) / $298,000 = $224,000 / $298,000 = 0.75.

A Company Has $23,000 in Cash and Cash Equivalents,$81,000 in Short-Term