Tassel Pty Ltd has a current ratio of 2.5:1 and current liabilities of $10 000. If Tassel has $10 000 of inventory, the quick ratio is:

Question

Quizplus · Accepted Answer

The quick ratio is calculated by subtracting inventory from current assets and then dividing by current liabilities. With a current ratio of 2.5:1, current assets are $25,000. Subtracting $10,000 of inventory gives $15,000 in quick assets. Dividing $15,000 by $10,000 in current liabilities gives a quick ratio of 1.5:1.

Tassel Pty Ltd Has a Current Ratio of 2