Arnold Corporation has an accounts receivable balance of $298,000, a cash balance of $57,100, and current liabilities of $429,000. Baker Company has a cash balance of $125,000, an accounts receivable balance of $57,100, and current liabilities of $151,000. Calculate the quick ratios of both companies and determine which company is in a better position to meet the obligations of its current liabilities.

 a. Arnold Corporation 0.83; Baker Company 1.21; Baker is better able to meet the obligations of its current liabilities. 

b. Arnold Corporation 1.21; Baker Company 0.83; Baker is better able to meet the obligations of its current liabilities.

c. Arnold Corporation 1.21; Baker Company 0.83; Arnold is better able to meet the obligations of its current liabilities.

d. Arnold Corporation 0.83; Baker Company 1.21; Arnold is better able to meet the obligations of its current liabilities

Answer rating: 100% (QA)

To calculate the quick ratio we use the following formula Quick Ratio Cash Accounts R... View the full answer