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Earth Grains Consulting has a quick ratio of 1.74 to 1. This ratio can be interpreted...

Earth Grains Consulting has a quick ratio of 1.74 to 1. This ratio can be interpreted as: Select one: a. having $1.74 in accounts receivable for every $1.00 in sales. having $1.74 in current assets for every $1.00 in current obligations. b. having $1.74 in quick assets for every $1.00 in current liabilities. c. having $1.74 in sales for every $1.00 in accounts receivable. d. having $1.74 in quick liabilities for every $1.00 in assets.

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Answer #1

Part (b) is Correct. Having $1.74 in quick assets for every $1.00 in Current Liabilities.

Quick ratio measures each dollar quick asset available for every dollar current liabilities.
Quick Ratio is represented as Quick Assets/ Current Liabilities.
Earth Grains Consulting having quick ratio equivalent to 1.74:1 means that it has $ 1.74 of very liquid assets which is available to cover short term debt i.e., its current liabilities. This ratio shows the liquidity position of the company to repay its short term debt as & when they become due.

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