Quick Ratio Calculation | CFA Level 1 Exam Preparation

Quick Ratio Calculation

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Question

The balance sheet of Firm A shows the following:

Cash & Cash equivalents 432 -

Receivables 98 -

Inventories 143 -

Marketable securities 329 -

Short-term loans 732 -

Current portion of long-term debt 210

The quick ratio of the firm equals ________.

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A. B. C. D.

A

The quick ratio is the current ratio calculated using only relatively liquid securities. These current assets are cash, marketable securities and receivables. Thus,

Quick ratio = (cash + marketable securities + receivables)/current liabilities In this case, Quick ratio = (432+98+329)/(732+210) = 0.91

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