Question

Jen's has current assets of $2,200, cash of $400, and inventory of $1,300. The firm has accounts payable of $300, long-term debt of $3,100, and accrued wages and taxes of $400. What is the quick ratio?

Answer 1

1.29

Explanation:

Data provided in the question:

Current assets = $2,200

cash = $400

Inventory = $1,300

Accounts payable = $300

long-term debt = $3,100

Accrued wages and taxes = $400

Now,

Quick ratio = [ Current assets - Inventory ] ÷ [ Current liabilities ]

also,

Current liabilities = Accounts payable + Accrued wages and taxes

= $300 + $400

= $700

or

Quick ratio = [ $2,200 - $1,300 ] ÷ $700

or

Quick ratio = $900 ÷ $700

= 1.29