Question

Assume cash = $500, notes payable in six months = $600, accounts receivable = $900, inventory = $1,500, and accounts payable = $1,100. What is the quick ratio?

Answer 1

Answer:

0.82 times

Explanation:

The computation of the quick ratio is shown below:

Quick ratio = Quick assets ÷ total current liabilities  

where,  

Quick assets = Cash + accounts receivable

= $500 + $900

= $1,400

And, the current liabilities is

= Notes payable in six months + accounts payable

= $600 + $1,100

= $1,700

So, the value would equal to

= $1,400 ÷ $1,700

= 0.82 times

The inventory is not included.