Adieu Company reported the following current assets and liabilities for December 31 for two recent years: Dec. 31, Current Year Dec. 31, Previous Year Cash $1,000 $1,140 1,400 Temporary investments 1,200 Accounts receivable 800 910 Inventory Accounts payable 2,200 2,300 1,875 2,300 a. Compute the quick ratio on December 31 of both years. b. Interpret the company's quick ratio. Is the quick ratio improving or declining?
Adieu Company reported the following current assets and liabilities for December 31 for two recent years: Dec. 31, Current Year Dec. 31, Previous Year Cash $1,000 $1,140 1,400 Temporary investments 1,200 Accounts receivable 800 910 Inventory Accounts payable 2,200 2,300 1,875 2,300 a. Compute the quick ratio on December 31 of both years. b. Interpret the company's quick ratio. Is the quick ratio improving or declining?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Adieu Company reported the following current assets and liabilities for December 31 for
two recent years:
Dec. 31, Current Year
Dec. 31, Previous Year
Cash
$1,000
$1,140
1,400
Temporary investments
1,200
Accounts receivable
800
910
Inventory
Accounts payable
2,200
2,300
1,875
2,300
a. Compute the quick ratio on December 31 of both years.
b. Interpret the company's quick ratio. Is the quick ratio improving or declining?
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