Duke’s Garage has cash of $68, accounts receivable of $142, accounts payable of $235, and inventory of $318. What is the value of the quick ratio? Select one: a. 2.25 b. .53 c. .71 d. .89 e. 1.35
Business · High School · Mon Jan 18 2021
Answered on
The quick ratio (also known as the acid-test ratio) is calculated as follows:
Quick Ratio = Cash + Accounts Receivable /Accounts Payable + Inventory
Given the values provided:
Cash = $68, Accounts Receivable = $142, Accounts Payable = $235, Inventory = $318
Let's plug these values into the formula:
Quick Ratio = $68+$142 / $235+$318
Quick Ratio = $210 / $553
Quick Ratio = 0.38
The value of the quick ratio is not among the options provided. However, if we take the closest value from the options, the value that is closest to 0.38 is b. 0.53.