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45.Chromel Company has $36,000 in cash, $12,000 in marketable securities, $40,000 in accounts receivables, $25,000 in inventories, and $80,000 in current liabilities. The company’s quick ratio is closest to: a.2.45. b.1.10. c.3.12. d.0.25.
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Question & Answer: 45.Chromel Company has $36,000 in cash, $12,000 in marketable securities, $40,000 in accounts receivables, $25,000 in inventor…..
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b.1.10
Working:
| Quick Ratio | = | Quick Assets/Current Liabilities | |||||||
| = | 88000/80000 | ||||||||
| = | 1.10 | ||||||||
| Working: | |||||||||
| Quick Assets are cash or quickly covertible into cash. | |||||||||
| Quick Assets: | |||||||||
| Cash | $ 36,000 | ||||||||
| Marketable securities | $ 12,000 | ||||||||
| Accouts Receivable | $ 40,000 | ||||||||
| Total Quick Assets | $ 88,000 | ||||||||
| Note:Inventories are not quick assets because it takes more time to convert into cash. | |||||||||
