Determine the quick ratio for the construction company in Figures 6-1 and 6-2. What insight does this give you into the company's financial operations?
Figures 6-1 WEST MOUNTAIN CONSTRUCTION
BALANCE SHEET
Figures 6-2 WEST MOUNTAIN CONSTRUCTION
INCOME STATEMENT
REVENUES ................ 789,839
CONSTRUCTION COSTS
Materials ................. 92,214
Labor ................... 199,690
Subcontract ................ 401,948
Equipment ................. 20,833
Other ................... 1,352
Total Construction Costs .......... 716,037
EQUIPMENT COSTS
Rent and Lease Payments .......... 3,773
Depreciation ................ 6,673
Repairs and Maintenance ........... 2,734
Fuel and Lubrication ............ 7,289
Taxes, Licenses, and Insurance ....... 364
Equipment Costs Charged to Jobs ...... 20,833
Total Equipment Costs ........... 0
GROSS PROFIT .............. 73,802
OVERHEAD .............. 53,827
NET PROFIT FROM OPERATIONS .... 19,975
OTHER INCOME AND EXPENSE ...... 1,162
PROFIT BEFORE TAXES ......... 21,137
INCOME TAX .............. 3,921
PROFIT AFTER TAXES .......... 17,216