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Young Company has the following assets and liabilities: Assets Cash $35,000 Accounts receivable 15,000 Inventory 30,000 Equipment 50,000 Liabilities Current portion of long-term debt $10,000 Accounts payable 2,000 Long-term debt 25,000 Determine the quick ratio (rounded to one decimal point).

Respuesta :

Answer: 4.2

Explanation:

The quick ratio will be calculated as:

= Current assets / Current liabilities

where,

Current asset = Cash + Account receivable = $35000 + $15000 = $50000

Current liabilities = Long term debt + Account payable = $10000 + $2000 = $12000

Quick ratio = Current assets / Current liabilities

= $50000 / $12000

= 4.2

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