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BACC011 Week 6: Practice Quiz

Short answer

A business has the following information. What is the quick ratio for the current year (also known as the acid-test ratio)? Give answer to 2 decimal places.    Prior year Current year Cash  13,627  13,936 Accounts receivable  15,617  17,237 Short-term investments  1,471  5,462 Inventory  16,353  15,671 Accounts payable 3,749 8,540 Unearned revenue 7,586 1,649 10 year bank loan 106,948 105,142

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Step-by-Step Analysis
To determine the quick (acid-test) ratio, we focus on the most liquid assets and exclude inventory. First, identify the quick assets for the current year: cash, accounts receivable, and short-term investments. Quick assets = Cash (13,936) + Accounts receivable (17,237) + Short-term investm......Login to view full explanation

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All other things beings equal, and assuming all ratios have positive values, an increase in current liabilities will:

A family runs a large farm in South Australia. Here is the quick ratio for the prior year and the current year.  Based on this ratio, evaluate the financial situation of the business.  Prior year Current year 1.1 0.7

[table] | Dec 31, 2019 | Dec 31, 2020 Current Assets | | Cash And Cash Equivalents | 768,000 | 860,000 Short Term Investments | - | - Net Receivables | 1,124,000 | 950,000 Inventory | 404,000 | 396,000 Office Supplier | 203,000 | 177,000 Total Current Assets | 2,499,000 | 2,383,000 | | Liabilities | | Current Liabilities | | Accounts Payable | 2,120,000 | 2,090,000 Short/Current Long Term Debt | 137,000 | 52,000 Other Current Liabilities | - | - Total Current Liabilities | 2,257,000 | 2,142,000 | | [/table]The Quick Ratio for 2019 is:

[table] | Dec 31, 2019 | Dec 31, 2020 Current Assets | | Cash And Cash Equivalents | 768,000 | 860,000 Short Term Investments | - | - Net Receivables | 1,124,000 | 950,000 Inventory | 404,000 | 396,000 Office Supplier | 203,000 | 177,000 Total Current Assets | 2,499,000 | 2,383,000 | | Liabilities | | Current Liabilities | | Accounts Payable | 2,120,000 | 2,090,000 Short/Current Long Term Debt | 137,000 | 52,000 Other Current Liabilities | - | - Total Current Liabilities | 2,257,000 | 2,142,000 | | [/table]The Quick Ratio for 2019 is:

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