Luther Corporation
Consolidated Balance Sheet
December 31, 2006 and 2005 (in $ millions)

Refer to the balance sheet above. The change in Luther's quick ratio from 2005 to 2006 is closest to ________.
A) a decrease of 0.01
B) an increase of 0.01
C) a decrease of 0.02
D) an increase of 0.02

Question

Luther Corporation
Consolidated Balance Sheet
December 31, 2006 and 2005 (in $ millions)

Refer to the balance sheet above. The change in Luther's quick ratio from 2005 to 2006 is closest to ________.
A) a decrease of 0.01 
B) an increase of 0.01 
C) a decrease of 0.02 
D) an increase of 0.02

Quizplus · Accepted Answer

B) Quick ratio in 2006 = ($158.9 - $46.5) / $144.1 = 0.78
Quick ratio in 2005 = ($144.0 - $42.9) / 132 = 0.77
So, the quick ratio increased by 0.78 - 0.77 = 0.01.

Luther Corporation Consolidated Balance Sheet