Question

Manual's Mowing Services has current cash in the amount of $3,365, accounts receivable of $11,250, and current liabilities of $6,109. Find the quick ratio.2.22.42.62.8None of these choices are correct.

Answer 1

In order to solve this, we define the quick ratio formula

`\begin{gathered} \text{Quick ratio (QR) =}\frac{\text{ }C\text{urrent cash+Accounts receivable}}{C\text{urrent liabilities}} \\ \text{Current cash = \$3,365} \\ \text{Accounts receivable =\$11,250} \\ \text{Current liabilities = \$6,109} \\ \text{Quick ratio (}QR)=\frac{\text{\$3,365}+\text{\$11,250}}{\text{\$6,109}}=\frac{\text{\$}14,615}{\text{\$}6,109}=2.39 \end{gathered}`

The quick ratio is approximately 2.4