Question

Park Media has cash of $218, accounts recelvabie of $457, accounts payable of $398, and inventory of $647. What is the value of the quick ratlo?

Answer 1

The quick ratio for Park Media is approximately 1.70.

Step-by-step explanation:

The quick ratio, also known as the acid-test ratio, is a measure of a company's ability to pay off its current liabilities with its most liquid assets. It is calculated by dividing the sum of cash and cash equivalents, short-term investments, and accounts receivable by the total current liabilities.

In this case, Park Media has cash of $218 and accounts receivable of $457, giving a total liquid assets of $675 ($218 + $457). The total current liabilities are $398 (accounts payable). Therefore, the quick ratio is $675/$398, which is approximately 1.70.