1The following balance sheet information is provided for Greene Company for Year 2:AssetsCashAccounts receivableInventoryPrepaid expensesPlant and equipment, net of depreciationLandTotal assetsLiabilities and Stockholders' EquityAccounts payableSalaries payableBonds payable (due in ten years)Common stock, no parRetained earningsTotal liabilities and stockholders' equityWhat is the company's quick (acid-test) ratio?Multiple ChoiceOC$ 5,40015,50018,0001,60020,20019,950$ 80,650$ 4,50011,50019,00030,00015,650$ 80,650< Prev27 of 35wwwBMacBook AirNext >SCHFELTEHEEEESubm

The objective of the question is to calculate the quick ratio (also known as the acid-test ratio) for Greene Company. The quick ratio is a measure of a company's ability to meet its short-term obligations using its most liquid assets. It is calculated as (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities.From the balance sheet information provided, we can identify the following relevant items: - Cash: $5,400 - Accounts Receivable: $15,500 - Current Liabilities (Accounts payable + Salaries payable): $4,500 + $11,500 = $16,000Substituting these values into the formula, we get: Quick Ratio = (Cash + Accounts Receivable) / Current Liabilities = ($5,400 + $15,500) / $16,000 = $20,900 / $16,000 = 1.30625Therefore, the quick ratio for Greene Company is 1.31 (rounded to two decimal places). This means that for every dollar of current liabilities, the company has $1.31 of liquid assets to cover it.The quick ratio (acid-test ratio) for Greene Company is 1.31. This indicates that the company has $1.31 of liquid assets for every dollar of current liabilities, suggesting a good short-term financial strength.