Question

Eagle Company has $9,000 in cash, $11,000 in marketable securities, $26,000 in current receivables, $34,000 in inventories, and $40,000 in current liabilities.

The company's quick ratio is closest to :

a. 1.35
b. 1.15
c. 2.00
d. 1.73

Answer 1

The company's quick ratio is closest to: b. 1.15

Step-by-step explanation:

The quick ratio is a liquidity ratio that indicates a company's ability to pay its current liabilities when they come due without needing to sell its inventory or get additional financing. The quick ratio is calculated by the following formula:

Quick ratio = (Cash & equivalents + Short Term investments + Accounts receivable)/Current Liabilities

Eagle Company has $9,000 in cash, $11,000 in marketable securities, $26,000 in current receivables, and $40,000 in current liabilities.

Quick ratio = ($9,000 + $11,000 + $26,000)/$40,000=$46,000/$40,000=1.15