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10 January, 06:50

Smith Corporation has ratio of 2.6. What is Smith's acid test (quick) ratio ds current assets of $11,400, inventories of $4,000, and a current of

a. 1.69

b ...54

c ...74

d. 1.35

e. 1.44

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Answers (1)
  1. 10 January, 07:01
    0
    Current ratio = Current assets

    Current liabilities

    2.6 = $11,400

    Current liabilities

    Current liabilities = $11,400

    2.6

    Current liabilities = $4,385

    Quick ratio = Current assets - Inventory

    Current liabilities

    Quick ratio = $11,400 - $4,000

    $4,385

    Quick ratio = 1.69

    Explanation:

    Current ratio is the ratio of current assets to current liabilities. The current ratio and current assets have been provided in the question with the exception of current liabilities. Thus, we will make current liabilities the subject of the formula.

    Quick ratio is calculated as current assets minus inventory divided by current liabilities. Since the current liabilities have been calculated. Then, we will divide the difference between current assets and inventory by current liabilities so as to determine the quick ratio.
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Home » Business » Smith Corporation has ratio of 2.6. What is Smith's acid test (quick) ratio ds current assets of $11,400, inventories of $4,000, and a current of a. 1.69 b ...54 c ...74 d. 1.35 e. 1.44
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