Question

Venture Corp. has current assets of $629,298, including inventory of $258,227, and current liabilities of $403,331 What is the quick ratio?

Answer 1

To calculate the quick ratio for Venture Corp., inventory is subtracted from current assets, then divided by current liabilities, resulting in a quick ratio of approximately 0.92:1.

Step-by-step explanation:

The quick ratio, also known as the acid test ratio, is a measure of a company's ability to meet its short-term obligations with its most liquid assets. To calculate Venture Corp.'s quick ratio, we need to subtract the inventory from the current assets and then divide by the current liabilities. Using the provided figures, the calculation is as follows: (($629,298 - $258,227) ÷ $403,331), which simplifies to ($371,071 ÷ $403,331). Therefore, the quick ratio for Venture Corp. is approximately 0.92:1