Answer:
(a) 1.20
(b) 1.40
Explanation:
For current year:
Quick Assets:
= cash + Accounts receivable
= $ 486,000 + $210,000
= $696,000
Therefore,
Quick Ratio = Current Assets(Quick) ÷ current Liabilities
= $696,000 ÷ $ 580,000
= 1.20
For previous year:
Quick Assets:
= cash + Accounts receivable
= $500,000 + $200,000
= $700,000
Therefore,
Quick Ratio = Current Assets(Quick) ÷ current Liabilities
= $700,000 ÷ $ 500,000
= 1.40