Quick Ratio Grangel Company reported the following current a

Quick Ratio Grangel Company reported the following current assets and liabilities for December 31 for two recent years: Dec. 31, Current Year Dec. 31, Previous Year $2,000 4,370 3,640 3,280 9,100 Cash $1,340 3,000 2,050 3,200 7,100 2 Temporary investments Accounts receivable Inventory Accounts payable a. Compute the quick ratio on December 31 of both years. If required, round your answers to one decimal place Quick Ratio December 31, current year December 31, previous year b. Is the quick ratio improving or declining?

Solution

Current year Previous year Cash 2000 1340 Temporary investment 4370 3000 Accounts receivable 3640 2050 Quick assets 10010 6390 Current liabilities Accounts payable 9100 7100 Quick ratio 1.1 0.9 (quick assets / current liabilities) Its improving