1. 2. Gmeiner Co. had the following current assets and liabilities on December 3
ID: 2526705 • Letter: 1
Question
1.
2.
Gmeiner Co. had the following current assets and liabilities on December 31 of two recent years Current Year Previous Year Current assets Cash Accounts receivable Inventory $816,000 724,000 447,000 $1,987,000 $1,077,000 507,000 428,000 $2,012,000 Total current assets Current liabilities Current portion of long-term debt Accounts payable Accrued and other current liabilities $112,000 224,000 364,000 $700,000 $99,000 198,000 363,000 $660,000 Total current liabilities a. Determine the quick ratio for December 31 of both years. If required, round your answers to one decimal place Quick Ratio Previous year Current year:Explanation / Answer
Answer to Part 1.
Quick Ratio = (Current Assets – Inventory)/ Current Liabilities
Previous Year:
Quick Ratio = (2,012,000 – 428,000) / 660,000
Quick Ratio = 1,584,000 / 660,000
Quick Ratio = 2.4 : 1
Current Year:
Quick Ratio = (1,987,000 – 447,000) / 660,000
Quick Ratio = 1,540,000 / 700,000
Quick Ratio = 2.2 : 1
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