US CMA Part 2 · Chapter 1 · Question 4 of 15
Calder Electronics has the following current items: Cash $48,000 Marketable securities $30,000 Accounts receivable (net) $126,000 Inventory $210,000 Prepaid expenses $18,000 Current liabilities $240,000 What is the quick (acid-test) ratio?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 0.85
Explanation
The quick ratio includes only cash, marketable securities and net receivables: ($48,000 + $30,000 + $126,000) / $240,000 = $204,000 / $240,000 = 0.85. Inventory and prepaid expenses are excluded because they cannot quickly be converted to cash. Including prepaids gives 0.93, the current ratio is 1.80, and 0.33 is the cash ratio.
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