Liquidity ratio: Zidane Enterprises has a current ratio of 1.92, current liabilities of $272,934, and inventory of 197,333. What is the company's quick ratio?
A) 0.72
B) 1.20
C) 1.92
D) None of the above

Question

Quizplus · Accepted Answer

The quick ratio is calculated as (Current Assets - Inventory) / Current Liabilities. First, find the current assets using the current ratio: Current Assets = Current Ratio * Current Liabilities = 1.92 * 272,934 = 524,036.48. Then, Quick Assets = Current Assets - Inventory = 524,036.48 - 197,333 = 326,703.48. Finally, Quick Ratio = Quick Assets / Current Liabilities = 326,703.48 / 272,934 = 1.20.

Liquidity Ratio: Zidane Enterprises Has a Current Ratio of 1