Question

XYZ Company

Balance Sheet
Assets
Cash
$10,000
Notes
$45,000
Inventory $61,000 Wages $56,000
Property $110,000
Liabilities
Equity
Stock
$50,000
Investment $39,000
Using the balance sheet
provided, what is the
decimal value for the
quick ratio?
quick ratio = [?]
Round to the nearest tenth.

Answer 1

To calculate the quick ratio, we need to use the formula:

Quick Ratio = (Cash + Notes + Accounts Receivable) / Current Liabilities

Looking at the balance sheet provided, we can see that there is no specific information about Accounts Receivable. However, we can calculate the quick ratio using the given information.

To do this, we add up the relevant assets (Cash and Notes) and divide it by the liabilities (Stock).

The quick ratio is:

Quick Ratio = (Cash + Notes) / Stock

From the balance sheet, we have:

Cash = $10,000

Notes = $45,000

Stock = $50,000

Now let's substitute the values into the formula:

Quick Ratio = ($10,000 + $45,000) / $50,000

Adding the values:

Quick Ratio = $55,000 / $50,000

Simplifying:

Quick Ratio = 1.1

Therefore, the decimal value for the quick ratio, rounded to the nearest tenth, is 1.1.

Explanation:

<3