Question

if a business has $8,000 in cash, $2,000 in accounts receivable, and $20,000 in current liabilities, what is its quick ratio?
2/3
1/2
3/4

Explanation:

Step1: Recall the quick ratio formula

The quick ratio is calculated as $\frac{\text{Cash + Accounts Receivable}}{\text{Current Liabilities}}$.

Step2: Identify the values

Cash = $8,000, Accounts Receivable = $2,000, Current Liabilities = $20,000.

Step3: Calculate the numerator

Sum of cash and accounts receivable: $8,000 + $2,000 = $10,000.

Step4: Calculate the quick ratio

Divide the numerator by current liabilities: $\frac{10,000}{20,000} = \frac{1}{2}$.

Answer:

1/2