Financial Reporting and Analysis Q183
0. The balance sheet data of a company is presented below:
| Current Assets | |
| Cash and cash equivalents | $1,900 |
| Marketable securities | 300 |
| Notes and accounts receivable, trade | 1,750 |
| Allowance for doubtful accounts | (500) |
| Inventories | 1,000 |
| Deferred income taxes | 540 |
| Other current assets | 250 |
| Total current assets | $5,240 |
| Current Liabilities | |
| Accounts payable and other accrued liabilities | $2,800 |
| Current portion of borrowings | 1,020 |
| Other current liabilities | 1,260 |
| Total current liabilities | $5,080 |
The company’s quick ratio is closest to:
- Option : A
- Explanation : Quick Ratio = (cash + marketable securities + receivables) / current liabilities = (1900 + 300 + 1750 - 500) / 5080 = 0.68. Note that ‘allowance for doubtful accounts’ needs to be subtracted to come up with the receivables number.
