Calculate the Quick Ratio given Cash = 20, Marketable Securities = 15, Receivables = 40, Current Liabilities = 50. Which of the following is correct?

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Multiple Choice

Calculate the Quick Ratio given Cash = 20, Marketable Securities = 15, Receivables = 40, Current Liabilities = 50. Which of the following is correct?

Explanation:
The Quick Ratio assesses short‑term liquidity using only the most liquid assets. It equals (cash + marketable securities + receivables) divided by current liabilities, excluding inventory and other less liquid current assets. Here, the liquid assets sum to 20 + 15 + 40 = 75, and current liabilities are 50. So the Quick Ratio is 75 / 50 = 1.5. This means the company has 1.5 times its current liabilities covered by quick assets, indicating solid near-term liquidity.

The Quick Ratio assesses short‑term liquidity using only the most liquid assets. It equals (cash + marketable securities + receivables) divided by current liabilities, excluding inventory and other less liquid current assets. Here, the liquid assets sum to 20 + 15 + 40 = 75, and current liabilities are 50. So the Quick Ratio is 75 / 50 = 1.5. This means the company has 1.5 times its current liabilities covered by quick assets, indicating solid near-term liquidity.

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