Zidane enterprises has a current ratio of 1.92, current liabilities of $272,934, and inventory of $197,333. what is the firm's quick ratio? round your final answer to two decimal places.

In order to answer this, let us examine the concepts first by defining what is a current ratio and a quick ratio.

Current ratio is merely the ratio of your current assets to current liabilities. This qualitatively determines the firm's ability to easily liquidate its assets especially in cases of urgency. On the other hand, quick ratio is also a liquidity ratio but more refined. Instead of the current assets, it accounts for the assets that are easily liquidated. So, you have to exclude assets like inventories and prepaid expenses from the total current assets. As a summary, the concept of current ratio and quick ratio are the same. They only differ on the extent of liquidity.

Current Ratio = Current Assets/Current Liabilities

Quick Ratio = (Current Assets - Inventories) / Current Liabilities

Using the equations above, the solution is

1.92 = Current Assets/$272,934

Current Assets = $524,033.28

Quick Ratio = ($524,033.28 - $197,333) / $272,934

Quick Ratio = 1.20