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Spartan Sportswear's current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data...

Spartan Sportswear's current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data were abstracted from a recent financial statement: Inventories $ 280,000

Total assets $ 825,000

Current ratio 2.90

Acid-test ratio 1.30

Debt to equity ratio 1.20

Required:

Compute the current assets for Spartan (Do not round intermediate calculations.):

Solutions

Expert Solution

Total assets = Current assets + Long-term assets
Current ratio (CA/Current Liabilities (CL)) = 2.90 ; therefore, CA = 2.90 CL
Acide Test ratio (QA/Current Liabilities) = 1.30 ; therefore, QA = 1.30 CL
QA = CA – Inventory
QA = CA – 280,000
1.3 CL = 2.90 CL – $280,000
1.60 CL = $280,000
CL = $175,000
Current Assest for Spartan = $ 507,500     ( 2.90 x 175,000 )

ekkarill92 answered 3 years ago
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