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Condensed financial data are presented below for the Phoenix Corporation:
| | 20X2 | | 20X1 |
| Accounts receivable | $ | 267,500 | | | $ | 230,000 | |
| Inventory | | 312,500 | | | | 257,500 | |
| Total current assets | | 670,000 | | | | 565,000 | |
| Intangible assets | | 50,000 | | | | 60,000 | |
| Total assets | | 825,000 | | | | 695,000 | |
| Current liabilities | | 252,500 | | | | 200,000 | |
| Long-term liabilities | | 77,500 | | | | 75,000 | |
| Sales | | 1,640,000 | | | | | |
| Cost of goods sold | | 982,500 | | | | | |
| Interest expense | | 10,000 | | | | | |
| Income tax expense | | 77,500 | | | | | |
| Net income | | 127,500 | | | | | |
| Cash flow from operations | | 71,000 | | | | | |
| Cash flow from investing activities | | (6,000 | ) | | | | |
| Cash flow from financing activities | | (62,500 | ) | | | | |
| Tax rate | | 30 | % | | | | |
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The quick ratio for 20X2 is (rounded): (Assume that total current assets include cash, marketable securities, accounts receivable and inventory).
Multiple Choice
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2.8 to 1
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1.6 to 1
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1.1 to 1
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1.4 to 1
Answer & Explanation
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