Math question help needed

Mathematics
Tutor: None Selected Time limit: 1 Day

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?

May 20th, 2015

Hi Ellery,

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.

May 20th, 2015

I got it now, thank you for explaining

May 20th, 2015

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