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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...

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?

Solutions

Expert Solution

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)


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