QuestionAugust 6, 2025

Emerald Company has 25,000 in cash, 15,000 in marketable securities, 45,000 in accounts receivable, 45,000 in inventories . and 50,000 in current liabilities. The company's quick ratio is: A 1.7 B 1.4 C 2.4 D 0.6

Emerald Company has 25,000 in cash, 15,000 in marketable securities, 45,000 in accounts receivable, 45,000 in inventories . and 50,000 in current liabilities. The company's quick ratio is: A 1.7 B 1.4 C 2.4 D 0.6
Emerald Company has 25,000 in cash, 15,000 in marketable securities, 45,000 in accounts receivable, 45,000 in inventories . and 50,000 in current liabilities. The company's quick ratio is: A 1.7 B 1.4 C 2.4 D 0.6

Solution
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Answer

A 1.7 Explanation 1. Calculate Quick Assets Quick assets = Cash + Marketable Securities + Accounts Receivable = \25,000 + \15,000 + \45,000 = \85,000. 2. Apply Quick Ratio Formula **Quick Ratio** = \frac{\text{Quick Assets}}{\text{Current Liabilities}} = \frac{85,000}{50,000}. 3. Simplify the Calculation Simplify \frac{85,000}{50,000} to get 1.7.

Explanation

1. Calculate Quick Assets<br /> Quick assets = Cash + Marketable Securities + Accounts Receivable = \$25,000 + \$15,000 + \$45,000 = \$85,000.<br />2. Apply Quick Ratio Formula<br /> **Quick Ratio** = $\frac{\text{Quick Assets}}{\text{Current Liabilities}}$ = $\frac{85,000}{50,000}$.<br />3. Simplify the Calculation<br /> Simplify $\frac{85,000}{50,000}$ to get 1.7.
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