Tamarack Outfitters at 31 December 2025 (CAD thousands): cash 220; accounts receivable 600; inventory 720; prepaids 60; total current assets 1,600; current liabilities 700; no short-term investments. Compute the current ratio and the quick ratio to two decimals, on the course’s definition (quick assets = cash + short-term investments + receivables).
Tamarack Outfitters at 31 December 2025 (CAD thousands): cash 220; accounts receivable 600; inventory 720; prepaids 60; total current assets 1,600; current liabilities 700; no short-term investments. Compute the current ratio and the quick ratio to two decimals, on the course’s definition (quick assets = cash + short-term investments + receivables).
Answer
Current ratio → 2.29 · Quick ratio → 1.17
Cells - Current ratio · ±0.01 - Quick ratio · ±0.01 Current ratio 1,600 ÷ 700 = 2.286. Quick ratio (220 + 600) ÷ 700 = 1.171 — inventory (720) and prepaids (60) excluded. Including prepaids (880 ÷ 700 = 1.26) is the definitional slip the course’s convention rules out.
Bigel §5.5; Lyryx Intro FA §12.2; Heisinger & Hoyle §12.5; Lyryx IFA Vol 2 §22.4.4