Using the information in QS 4-14, calculate Tucker Companys quick ratio (round to two decimal places). Information
Question:
Information 4-14
Calculate Tucker Companys current ratio, given the following information about its assets and liabilities (round to two decimal places) and compare it to the industry average current ratio of 2.2.
Accounts receivable... Accounts payable.. Long-term notes payable* Office supplies... Prepaid insurance $15,000 $20,000 10,000 1,800 Buildings.. 42,000 2,500 6,000 Unearned services revenue.. Cash.. 4,000 . *Due in three years.
Step by Step Answer:
Quick ratio Cash Accounts R...View the full answer
Fundamental Accounting Principles Volume 1
ISBN: 9781259259807
15th Canadian Edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
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