what is the quick ratio if cash is 12,000 accounts
receivable is 30,000, inventories is 25,000 and accounts payable 40,000 and
accrued payroll is 13,000?
The quick ratio is a measure of liquidity. So it's current assets/liabilities.
In this case, only cash and accounts receivable count for the numerator. Inventory is not a current asset.
So, cash + accounts receivable / Accounts Payable + Accrued Payroll, or 0.79
Note that the portion of accrued payroll that is /not/ current (due next month, in the next six months, etc) wouldn't be included. Here the assumptions appears to be that it is all current.
I got it now, thank you for explaining
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