Adieu Company reported the following current assets and current liabilities for two recent years: Dec. 31,...

Adieu Company reported the following current assets and current liabilities for two recent years: Dec. 31, 20Y4 Dec. 31, 20Y3 Cash $970 $1,040 Temporary investments 1,200 1,400 Accounts receivable 830 920 Inventory 2,300 2,500 Accounts payable 2,000 2,400 a. Compute the quick ratio on December 31 for each year. Round to one decimal place. 20Y4 20Y3 Quick Ratio

Expert Solution

Summary of the date given in question is :

	Dec. 31, 20Y4	Dec. 31, 20Y3
Cash	970	1,040
Temporary investments	1,200	1,400
Accounts receivable	830	920
Inventory	2,300	2,500
Accounts payable	2,000	2,400

Quick ratio = quick asset/ current liabilities

Where;

Qucik asset =	Cash + tem. Investment + account receivable
current liabilities =	Account payable

Quick asset are those asset that can be liquided easily and thats the reason that Inventory is not part of it.

	Dec. 31, 20Y4	Dec. 31, 20Y3
Cash	970	1,040
Temporary investments	1,200	1,400
Accounts receivable	830	920
Qucik asset (sum of above) (a)	3,000	3,360
current liabilities (b)	2,000	2,400
Quick ratio (a/b)	1.50	1.40

ekkarill92 answered 2 years ago

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