Question

If a company has current assets of $250,000, quick assets of $120,000, total assets of $1,000,000, current liabilities of $200,000, and total liabilities of $700,000, what is its quick ratio?

Answer 1

The quick ratio is a financial ratio that measures a company's ability to pay off its current liabilities with its quick assets. In this case, the company's quick ratio is 0.6.

Step-by-step explanation:

The quick ratio is a financial ratio that measures a company's ability to pay off its current liabilities with its quick assets. Quick assets include cash, marketable securities, and accounts receivable.

To calculate the quick ratio, divide the quick assets by the current liabilities. In this case, the company's quick assets are $120,000, and the current liabilities are $200,000.

Quick ratio = Quick assets / Current liabilities = $120,000 / $200,000 = 0.6

Therefore, the quick ratio of the company is 0.6.