The financial statements of Ahmad’s Company indicated that: Cash $25,000, Account receivables $ 35,000, Inventory $240,000, Current liabilities $40,000, Net Sales $90,000 and Gross profit is $32,000

Accounting Jan 23, 2021

The financial statements of Ahmad’s Company indicated that: Cash $25,000, Account receivables $ 35,000, Inventory $240,000, Current liabilities $40,000, Net Sales $90,000 and Gross profit is $32,000. The Quick Ratio is:

a. 1.5

b. 2.25

c. 7.5

d. 3.33

Expert Solution

Quick ratio = [Cash + Accounts receivable] / Current Liability

= (25,000 + 35,000)/ 40,000

= 60,000 / 40,000

= 1.5

Thus, correct answer is (a).

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