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15 September, 07:44

Act II Costumes currently has $120,000 in cash, $340,000 in inventory, and $20,000 in accounts receivable. The company also has $20,000 in accounts payable, and $20,000 in other current liabilities. What is its quick ratio?

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  1. 15 September, 08:34
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    Quick ratio = Current assets - Inventory/Current liabilities

    = $480,000 - $340,000/$40,000

    = 3.5

    Current assets = $120,000 + $340,000 + $20,000 = $480,000

    Current liabilities = $20,000 + $20,000 = $40,000

    Explanation:

    Explanation: Quick ratio is the ratio of liquid assets to current liabilities. Liquid assets are current assets less inventory. Liquid assets amounted to $140,000 while current liabilities are $40,000. The division of liquid assets by current liabilities gives quick ratio.
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Home » Business » Act II Costumes currently has $120,000 in cash, $340,000 in inventory, and $20,000 in accounts receivable. The company also has $20,000 in accounts payable, and $20,000 in other current liabilities. What is its quick ratio?
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