A contractor has current assets of $88,000, inventory of $14,000, and current liabilities of $37,000. What is the quick ratio?
Correct Answer
B) 2.00.
Quick ratio removes inventory from current assets before dividing by current liabilities: ($88,000 - $14,000) / $37,000 = 2.00.
Why This Is the Correct Answer
Quick ratio removes inventory from current assets before dividing by current liabilities: ($88,000 - $14,000) / $37,000 = 2.00.
Why the Other Options Are Wrong
Option A: 2.38.
2.38. is above the supported result for financial ratios; it likely adds an unsupported amount or compares the wrong financial base.
Option C: 1.68.
1.68. is below the supported result for financial ratios; it likely uses the wrong base, period, or account bucket.
Option D: 3.38.
3.38. is above the supported result for financial ratios; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Financial Ratios drawer for Reviewing Contractor'S: label quick before counting dollars.
Reference Hint
Study anchor (closed-book): memorize Financial ratios from CSLB Law and Business Study Guide; CSLB 2026 Law Book / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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