Hi, I am currently studying for my exam and unfortunately I am unable to figure this answer. Can someone please explain to me how the current ratio is 1.11?
Cinderella is trying to find her firm's ability to convert assets into cash (liquidity). The firm has $457,900 in the bank account, accounts receivable represent $125,678 and the accounts receivable aging is currently measured at 65 days. Its total liabilities are currently $760,111. Which of the following amounts for the revenue billed but not earned, would be more appropriate, in order for the firm to have a “healthy” liquidity?
The quick ratio is calculated as follows:
(total cash + accounts receivable + revenue billed but not earned) ÷ total liabilities.
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