Question

Balance Sheet Current assets Cash 910,000 Acc receivable not given Inventories 1,050,000 Fixed assets 3,710,000 TOTAL ASSETS 7,000,000 Current liabilities Acc payable not given Long-term debt 3,500,000 Common stock 560,000 Retained earnings 2,470,000 TOTAL LIAB and EQUITY 7,000,000 Income Statement Sales 14,000,000 Operating expense 11,200,000 EBIT 2,800,000 Interest expense 490,000 EBT 2,310,000 Taxes 924,000 Net income 1,386,000 What is the firm's quick ratio?

Answer 1

4.77

Step-by-step explanation:

The formula below is used to calculate quick ratio

Current assets - Inventories / Current liabilities

Account receivables =$1,330,000

Current assets = $3,290,000

Inventories = $1,050,000

Account payable = $470,000

Current liabilities = $470,000

Therefore,

Quick ratio = ($3,290,000 - $1,050,000) / $470,000

= 4.77