Question

eBook Calculator Quick ratio American Eagle Outfitters Inc. (AEO) operates specialty retail stores, selling clothing such as denim, sweaters, t-shirts, and fleece outerwear that targets 15 to 25 year old men and women, that targets 15 to 25 year old men and women. The following asset and liability data (in millions) were adapted from recent financial statements. Year 2 Year 1 Current assets: Cash $411 $429 Accounts receivable 74 Inventory 279 291 Prepaid and other current assets 133 Total current assets 5891 5928 Total current liabilities 5459 $415 1. Compute quick assets for Years 2 and 1. Quick Assets 479 ✓ million 503 → million (Round your answers to two decimal place.) 2. Compute the quick ratio for Years 2 and 1. Check My World < Previous Next > Show all

Answer 1

Quick ratio = (cash + accounts receivable)/current liabilities

for year 2,

quick ratio = ($411 + $68)/$459

= $479/$459

= 1.04 times

for year 1,

quick ratio = ($429 + $74)/$415

= $503/$415

= 1.21 times