In: Finance
JKL Corp. has $6,500,000 in cash, $7,000,000 in accounts receivable, $1,500,000 in inventory, $32,000,000 in total assets, $12,000,000 in shareholder equity, and $8,500,000 in long-term liabilities. How much is the firm’s Quick Ratio?
Current assets=Cash+AR+inventory
=(6,500,000+7,000,000+1,500,000)=$15,000,000
Total assets=Total liabilities+Total equity
32,000,000=(Long term debt+Current liabilities)+12,000,000
32,000,000=8,500,000+Current liabilities+12,000,000
Current liabilities=(32,000,000-8,500,000-12,000,000)
=$11,500,000
Quick ratio=(Current assets-inventory)/Current liabilities
=(15,000,000-1,500,000)/11,500,000
=1.17(Approx)