Question

Manual's Mowing Services has current cash in the amount of $3,365, accounts receivable of $11,250, and current liabilities of $6,109. Find the quick ratio.2.22.42.62.8None of these choices are correct.

Answer 1

In order to solve this, we define the quick ratio formula

$\begin{gathered} \text{Quick ratio (QR) =}\frac{\text{ }C\text{urrent cash+Accounts receivable}}{C\text{urrent liabilities}} \\ \text{Current cash = \ 3,365} \\ \text{Accounts receivable =\ 11,250} \\ \text{Current liabilities = \ 6,109} \\ \text{Quick ratio (}QR)=\frac{\text{\ 3,365}+\text{\ 11,250}}{\text{\ 6,109}}=\frac{\text{\ }14,615}{\text{\ }6,109}=2.39 \end{gathered}$

The quick ratio is approximately 2.4