Gmeiner Co. had the following current assets and liabilities on December 31 of t

Question

Gmeiner Co. had the following current assets and liabilities on December 31 of two recent years:

a. Determine the quick ratio for December 31 of both years. If required, round your answers to one decimal place.

Current Year Previous Year Current assets: Cash $604,000 $857,000 Accounts receivable 535,000 403,000 Inventory 330,000 340,000 Total current assets $1,469,000 $1,600,000 Current liabilities: Current portion of long-term debt $107,000 $95,000 Accounts payable 214,000 189,000 Accrued and other current liabilities 349,000 346,000 Total current liabilities $670,000 $630,000

Explanation / Answer

Solution:

Quick Ratio = Quick Assets / Current Liabilities

Quick Assets = Current Assets - Inventory

Quick Assets - Current year = $1,469,000 - $330,000 = $1,139,000

Quick Assets - Previous year = $1,600,000 - $340,000 = $1,260,000

Current liabilities - Current year = $670,000

Current liabilities - Previous year = $630,000

Quick ratio - Current year = $1,139,000 / $670,000 = 1.7

Quick ratio - Previous year = $1,260,000 / $630,000 = 2

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.