Quick ratio OBJ. 6 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 Temporary investments 1,200 1,400 Accounts receivable 800 910 Inventory 2,200 2,300 Accounts payable 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?

EE 10-6 p. 470 SHOW ME HOW EE 10-7 p. 472 SHOW ME HOW EE 10-7 p. 472 SHOW ME HOW EE 10-8 p. 475 SHOW ME HOW EE 10-8 p. 475 SHOW ME HOW Exercises