Redwood Co.'s financial statements had the following information at year end:?

Question

Cash $60,000

Accounts receivable 180,000

Allowance for uncollectible accounts 8,000

Inventory 240,000

Short-term marketable securities 90,000

Prepaid rent 18,000

Current liabilities 400,000

Long-term debt 220,000

What was Redwood's quick ratio?

a.0.81 to1

b.0.83 to1

c.0.94 to1

d.1.46 to1

MOHAMMAD HANIF · Answer

Redwood's quick ratio answer is0.81 to1

SHADY AHMED · Answer

A IS THE CORRECT ANSWER BECAUSE QUICK RATIO = CASH + M.SECURITIES+ A/R DIVIDED BY CURRENT LIABILITIES

Khushbu Shah · Answer

Answer is Option A -0.81 to 1

Reason being Quick Ratio is

(Cash + Cash Equivalents+ short term investments+ accounts receivable) /

(current liabilities ):1

Adeel Salam Shaikh CPA, CMA · Answer

b.0.83 to1.........................

Aliya Bhat · Answer

quick ratio which includes all other current asset except inventory = (CA- inventory)/Current liability = .85 :answer b

Asad Ahmed · Answer

Quick ratio is ((C/A-Inventory)/C/L) this mean that

(Cash + Net A/R +Short-term Marketable Securities + Prepaid rent) / Current Liabilities

=0.85 to1

Note: the prepaid rent is for the one year only not for more than one year