In the ADU conversion file, cash is $34,000, receivables are $41,000, inventory is $20,000, and current liabilities are $60,000. What is the quick ratio?
Correct Answer
C) 1.25.
Quick assets are cash plus receivables: $34,000 + $41,000 = $75,000. $75,000 / $60,000 = 1.25.
Why This Is the Correct Answer
Quick assets are cash plus receivables: $34,000 + $41,000 = $75,000. $75,000 / $60,000 = 1.25.
Why the Other Options Are Wrong
Option A: 0.90.
0.90. is below the supported result for quick ratio; it likely uses the wrong base, period, or account bucket.
Option B: 1.58.
1.58. is above the supported result for quick ratio; it likely adds an unsupported amount or compares the wrong financial base.
Option D: 1.00.
1.00. is below the supported result for quick ratio; it likely uses the wrong base, period, or account bucket.
Memory Technique
Assets and cash live in different drawers; Checking Assets tells which opens.
Reference Hint
Study anchor (closed-book): memorize Quick ratio from CSLB Law and Business Study Guide; California tax and payroll guidance / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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