Question

if a business has $10,000 in cash, $5,000 in accounts receivable, and $3,000 in current liabilities, what is its quick ratio?
3
7
5

Explanation:

Step1: Recall Quick Ratio Formula

The quick ratio formula is $\text{Quick Ratio} = \frac{\text{Cash} + \text{Accounts Receivable}}{\text{Current Liabilities}}$.

Step2: Identify Values

Cash = $\$10,000$, Accounts Receivable = $\$5,000$, Current Liabilities = $\$3,000$.

Step3: Calculate Numerator

Sum of cash and accounts receivable: $10,000 + 5,000 = 15,000$.

Step4: Calculate Quick Ratio

Divide numerator by current liabilities: $\frac{15,000}{3,000} = 5$.

Answer:

5