the total current assets of Gorgan company is equal to $540,000. This includes cash of $40,000, inventories of $250,000, and accounts receivables of $250,000. the current liabilities of the company is equal to $400,000. Calculate the companies quick ratio (round to 2 decimal places). A) 1.35 B) 1.25 C) 0.63 D) 0.73
the total current assets of Gorgan company is equal to $540,000. This includes cash of $40,000, inventories of $250,000, and accounts receivables of $250,000. the current liabilities of the company is equal to $400,000. Calculate the companies quick ratio (round to 2 decimal places). A) 1.35 B) 1.25 C) 0.63 D) 0.73
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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the total current assets of Gorgan company is equal to $540,000. This includes cash of $40,000, inventories of $250,000, and accounts receivables of $250,000. the current liabilities of the company is equal to $400,000. Calculate the companies quick ratio (round to 2 decimal places).
A) 1.35
B) 1.25
C) 0.63
D) 0.73
Expert Solution
Step 1
Hence, the correct option is (D). The quick ratio is 0.73. It is obtained by dividing current assets minus inventory by current liabilities.
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