Quick ratio
Gmeiner Co. had the following current assets and liabilities for two comparative years:
|
Current assets:
|
|
|
|
Cash
|
$ 486,000
|
$ 500,000
|
|
Accounts receivable
|
210,000
|
200,000
|
|
Inventory
|
375,000
|
350,000
|
|
Total current assets
|
$1,071,000
|
$1,050,000
|
|
Current liabilities:
|
|
|
|
Current portion of long-term debt
|
$ 145,000
|
$ 110,000
|
|
Accounts payable
|
175,000
|
150,000
|
|
Accrued and other current liabilities
|
260,000
|
240,000
|
|
Total current liabilities
|
$ 580,000
|
$ 500,000
|
a. Determine the quick ratio for December 31, 2014 and 2013.
b. Interpret the change in the quick ratio between the two balance sheet dates.