XYZ Company Balance Sheet Assets Cash $10.000 Notes Inventory $61,000 Wages Property $110.000 Liabilities Total Assets Equity Stock $65,000 $76,000 $50.000 Investment $39.000 Total Liabilities + Equity Using the balance sheet provided, what is the decimal value for the quick ratio? quick ratio=[?] Round to the nearest tenth. Enter
XYZ Company Balance Sheet Assets Cash $10.000 Notes Inventory $61,000 Wages Property $110.000 Liabilities Total Assets Equity Stock $65,000 $76,000 $50.000 Investment $39.000 Total Liabilities + Equity Using the balance sheet provided, what is the decimal value for the quick ratio? quick ratio=[?] Round to the nearest tenth. Enter
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![**XYZ Company Balance Sheet**
**Assets**
- Cash: $10,000
- Inventory: $61,000
- Property: $110,000
**Liabilities**
- Notes: $65,000
- Wages: $76,000
**Equity**
- Stock: $50,000
- Investment: $39,000
**Total Assets = Total Liabilities + Equity**
**Question:**
Using the balance sheet provided, what is the decimal value for the quick ratio?
**Quick Ratio = [?]**
*Round to the nearest tenth.*
---
**Explanation for Educational Purposes:**
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term liabilities with its most liquid assets. It is calculated using the formula:
\[ \text{Quick Ratio} = \frac{\text{Cash} + \text{Marketable Securities} + \text{Receivables}}{\text{Current Liabilities}} \]
In this case, since the exact amount of receivables and marketable securities is not provided, we'll assume typical quick assets here to be cash only:
- Quick Assets (assuming cash is the only quick asset available): $10,000
- Current Liabilities (Notes + Wages): $65,000 + $76,000 = $141,000
\[ \text{Quick Ratio} = \frac{10,000}{141,000} \approx 0.071 \]
When rounded to the nearest tenth, the quick ratio is 0.1.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F12b7d8e5-e1f4-4366-964c-d88f3b8c0c01%2F1b323afd-14cd-4b92-adce-4145befb7c40%2Fhpc0mzo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**XYZ Company Balance Sheet**
**Assets**
- Cash: $10,000
- Inventory: $61,000
- Property: $110,000
**Liabilities**
- Notes: $65,000
- Wages: $76,000
**Equity**
- Stock: $50,000
- Investment: $39,000
**Total Assets = Total Liabilities + Equity**
**Question:**
Using the balance sheet provided, what is the decimal value for the quick ratio?
**Quick Ratio = [?]**
*Round to the nearest tenth.*
---
**Explanation for Educational Purposes:**
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term liabilities with its most liquid assets. It is calculated using the formula:
\[ \text{Quick Ratio} = \frac{\text{Cash} + \text{Marketable Securities} + \text{Receivables}}{\text{Current Liabilities}} \]
In this case, since the exact amount of receivables and marketable securities is not provided, we'll assume typical quick assets here to be cash only:
- Quick Assets (assuming cash is the only quick asset available): $10,000
- Current Liabilities (Notes + Wages): $65,000 + $76,000 = $141,000
\[ \text{Quick Ratio} = \frac{10,000}{141,000} \approx 0.071 \]
When rounded to the nearest tenth, the quick ratio is 0.1.
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