Question

What is the quick ratio for the year ending 10/31/2010? Use total net receivables. Also pay attention to the dates in the question.

0.870

0.638

0.592

1.046

None of the above.

Toro Co. (The) (NYS: TTC)
Exchange rate used is that of the Year End reported date
As Reported Annual Balance Sheet
Report Date	10/31/2010
Currency	USD
Audit Status	Not Qualified
Consolidated	Yes
Scale	Thousands
Cash & cash equivalents	177,366
Customer receivables, gross	132,182
Less: allowance for doubtful accounts	3,828
Customers receivables, net	128,354
Other receivables, net	14,547
Total receivables, net	142,901
Inventories, net	194,402
Prepaid expenses & other current assets	10,766
Deferred income taxes	59,538
Total current assets	584,973
Land & land improvements	24,667
Buildings & leasehold improvements	115,480
Machinery & equipment	396,228
Computer hardware & software	57,695
Property, plant & equipment, gross	594,070
Less: accumulated depreciation	420,663
Property, plant & equipment, net	173,407
Deferred income taxes	842
Other assets	17,038
Goodwill	86,400
Other intangible assets, net	22,962
Total assets	885,622
Current portion of long-term debt	1,970
Short-term debt	1,034
Accounts payable	125,138
Other accrued liabilities	48,902
Total current liabilities	368,283
Debentures	100,000
Senior notes	123,358
Senior unsecured debt	-
Other long-term debt	2,190
Total long-term debt	225,548
Less current portion	1,970
Long-term debt, less current portion	223,578
Deferred revenue	10,944
Long-term deferred income taxes	-
Other long-term liabilities	7,007
Deferred revenue & other long-term liabilities	-
Common stock	31,395
Retained earnings (accumulated deficit)	253,477
Accumulated comprehensive income (loss)	(9,062)
Total stockholders' equity (deficit)	275,810

Answer 1

Quick ratio is defined as = Quick Assets / Current liabilities

Quick assets are those assets that can be converted to cash quickly. They should, in general include cash, cash equivalent and net receivables.

Please refer to the balance sheet provided in the question. The quick ratio can then be calculated as shown in table below:

All financials below in $ '000	Linkage	Value
Cash & cash equivalent	A	177,366
Customer receivables, net	B	128,354
Other receivables, net	C	14,547
Total Quick assets	D=A + B + C	320,267
Total Current Liabilities	E	368,283
Quick ratio	D/E	0.870

So, the first option of 0.870 is correct answer.