Question

what is the quick ratio of chester ?choose between this ( 2.51 1.31 1.96 4.27) this the information ASSETS 2018 2017 Common Size Cash $16,290 17.0% $17,334 Accounts Receivable $12,268 12.8% $9,833 Inventory $14,319 15.0% $17,117 Total Current Assets $42,877 44.9% $44,284 Plant & Equipment $93,960 98.3% $84,380 Accumulated Depreciation ($41,287) -43.2% ($35,023) Total Fixed Assets $52,673 55.1% $49,357 Total Assets $95,550 100.0% $93,641 LIABILITIES & OWNERS' EQUITY Accounts Payable $7,927 8.3% $6,601 Current Debt $13,954 14.6% $18,436 Long Term Debt $20,853 21.8% $19,477 Total Liabilities $42,734 44.7% $44,514 Common Stock $8,803 9.2% $9,100 Retained Earnings $44,014 46.1% $40,027 Total Equity $52,817 55.3% $49,127 Total Liab. & O. Equity $95,550 100.0% $93,641

Answer 1

• All working forms part of the answer
• Quick ratio = Quick Assets / Total Current Liabilities,

Where Quick Assets = Cash + Accounts receivables + Other current assets (excluding Inventory and Prepaid expenses)

OR

Quick Assets = Total Current Assets – Inventory – Prepaid Expenses.

----Inventory and Prepaid expenses(in spme instances) are not included in Quick Assets, rest quick asset is same as current asset.

• Working for both years:

	2018	2017
Cash	$      16,290.00	$          17,334.00
A/R	$      12,268.00	$            9,833.00
Total Quick Assets	$      28,558.00	$          27,167.00

	2018	2019
Accounts payable	$         7,927.00	$            6,601.00
Current Debt	$      13,954.00	$          18,436.00
Total Current Liabilities	$      21,881.00	$          25,037.00

• Solution

Working		2018	2019
A (Numerator)	Total Quick Assets	$      28,558.00	$          27,167.00
B (Denominator)	Total Current Liabilities	$      21,881.00	$          25,037.00
C = A/B	Quick Ratio	1.31	1.09

• Hence, the correct answer for Quick ratio for the year 2018 = 1.31