Compete Corporation reported a quick ratio of 1.75,current assets of $50,000,and a current ratio of 2.
A.Calculate the total amount of quick assets.
B.What is another name for the quick ratio?
C.Describe what type of assets are considered quick assets and give some examples.
D.How does the quick ratio compare to the current ratio?

A.Current ratio = 2 = current assets divided by current liabilities.
Current liabilities = $50,000 ÷ 2 = $25,000.Quick assets = 1.75 times the current liabilities = 1.75 × $25,000 = $43,750 quick assets.
B.Acid-test ratio.
C.Quick assets are assets able to be readily converted to cash.Quick assets often include cash,short-term investments,and net accounts receivable.
D.The quick ratio test of liquidity is a more stringent test of short-term liquidity than the current ratio.It compares quick assets (cash or one step away from cash)to total current liabilities.The quick ratio is less than the current ratio for companies with inventories and/or prepaid assets.These items are not included in the numerator of the quick ratio so the numerator is lower than that of the current ratio but both ratios have the same denominator so the quick ratio is lower.