Quick Ratio Gmeiner Co. had the following current assets and liabilities on December 31 of two recent years: Current Year Previous Year Current assets: Cash $ 486,000 $ 500,000 Accounts receivable 210,000 200,000 Inventory 375,000 350,000 Total current assets $1,071,000 $1,050,000 Current liabilities: Current portion of long-term debt $ 145,000 $ 110,000 Accounts payable 175,000 150,000 Accrued and other current liabilities 260,000 240,000 Total current liabilities $ 580,000 $ 500,000 a. Determine the quick ratio for December 31 of both years. If required, round your answers to one decimal place.

Question

Business

Roman Dudley

27 January, 13:13

Quick Ratio Gmeiner Co. had the following current assets and liabilities on December 31 of two recent years: Current Year Previous Year Current assets: Cash $ 486,000 $ 500,000 Accounts receivable 210,000 200,000 Inventory 375,000 350,000 Total current assets $1,071,000 $1,050,000 Current liabilities: Current portion of long-term debt $ 145,000 $ 110,000 Accounts payable 175,000 150,000 Accrued and other current liabilities 260,000 240,000 Total current liabilities $ 580,000 $ 500,000 a. Determine the quick ratio for December 31 of both years. If required, round your answers to one decimal place.

+2

Answers (1)

Know the Answer?

Mathews · Answer 1

(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