Understanding Quick Ratio in Financial Analysis

Explanation:

The quick ratio, also known as the acid-test ratio, is a measure of a company's liquidity. It measures the ability of a company to pay off its current liabilities using only its most liquid assets.

The quick ratio is calculated by subtracting the inventory from the current assets and then dividing the result by the current liabilities.

In this case, Solid Rock Construction has current assets totaling $7 million, including $4 million in inventory. So, the quick assets would be $7 million - $4 million = $3 million. The company's current liabilities total $5 million. Therefore, the quick ratio is $3 million / $5 million = 0.6.

Since none of the given answer choices match the calculated quick ratio, it is not possible to determine the correct answer based on the information provided.