Asked by Masaki Sakurai on Jun 30, 2024
Verified
The following items are reported on Denver Company's balance sheet: Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place.
Quick Ratio
A financial metric that measures a company's ability to meet its short-term obligations with its most liquid assets.
Current Ratio
A liquidity measure indicating a company’s ability to meet short-term obligations with its short-term assets.
Decimal Place
A position to the right of a decimal point in a number, representing a fraction of a whole.
- Build competence in the application of financial ratio analysis to determine a company’s financial performance, including profitability, liquidity, and its ability to sustain operations.
- Detect and quantify multiple financial proportions including debt to equity ratio, times interest earned, current ratio, and quick ratio.
Verified Answer
Current ratio = ($190,000 + $160,000 + $240,000 + $350,000) ÷ $600,000
Current ratio = 1.6
(b)Quick ratio = Quick assets ÷ Current liabilities
Quick ratio = ($190,000 + $160,000 + $240,000) ÷ $600,000
Quick ratio = 1.0
Learning Objectives
- Build competence in the application of financial ratio analysis to determine a company’s financial performance, including profitability, liquidity, and its ability to sustain operations.
- Detect and quantify multiple financial proportions including debt to equity ratio, times interest earned, current ratio, and quick ratio.
Related questions
Ratios May Be Expressed as (1)________,(2)________,or (3)________
Use the Financial Data Shown Below to Calculate the Following ...
A Common Focus of Financial Statement Users in Evaluating a ...
The Debt Ratio,the Equity Ratio,debt-To-Equity Ratio,and Times Interest Earned Are ...
Company G Has a Ratio of Liabilities to Stockholders' Equity ...