Current Ratio and Quick (Acid-Test) Ratio Upton Company has current assets equal to $2,885,000. Of these,...

Current Ratio and Quick (Acid-Test) Ratio Upton Company has current assets equal to $2,885,000. Of these, $1,100,000 is cash, $1,105,000 is accounts receivable, and the remainder is inventories. Current liabilities total $2,850,000. Required: Note: Round answers to two decimal places.

1. Compute the current ratio.

2. Compute the quick (acid-test) ratio.

Feedback 1. Current Ratio = Current Assets/Current Liabilities 2. Quick Ratio = (Cash + Marketable Securities + Accounts Receivable)/Current Liabilities

Solutions

Expert Solution

Solution

1. Current ratio	1.0
2. Quick ratio	0.8

		Working
a. Current ratio	1.0	Current assets / Current liabilities.... (2885000/2850000)
b. Quick ratio	0.8	(Current assets-Inventory) / Current liabilities ((2885000-680000)/285000

Cash	$ 1,100,000.00
Marketable securities	$ 1,105,000.00
Inventory	$ 680,000.00
Total current assets	$ 2,885,000.00

ekkarill92 answered 1 year ago

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