Question

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

Answer 1

Answer:

The correct answer is option (D).

Explanation:

According to the scenario, the given data are as follows:

Cash (assets) = $68

Accounts receivables ( assets ) = $142

accounts payable ( liabilities)  = $235

Inventory = $318

So, we can calculate quick ratio by using following formula:

Quick ratio = Assets / Liabilities

= $68 + $ 142 / $235

= $210 / $235

= 0.89

Hence, the value of quick ratio is 0.89.