Quick Ratio The following financial data is from Hi-Tech Instruments\' financial

Question

Quick Ratio
The following financial data is from Hi-Tech Instruments' financial statements (thousands of dollars, except earnings per share.)

(Thousands of Dollars)

Calculate the company’s quick ratio for 2016.

Round answer to one decimal place.

Answer

Compare the result to the industry average.

Hi-Tech Instruments' ratio is higher than the industry average.

Hi-Tech Instruments' ratio is lower than the industry average.

2016 Sales revenue $210,000 Cost of goods sold 125,000 Net income 8,300 Dividends 2,600 Earnings per share 4.15

Explanation / Answer

Quick ratio = (current assets - inventory) / current liabilities

Quick ratio (2016) = (143800-39500)/45000 = 2.3

Quick ratio (industry) = 1.3

Therefore,

Hi-Tech Instruments' ratio is higher than the industry average.

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