Question

In: Accounting

Bronco Electronics' current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data...

Bronco Electronics' current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data were abstracted from a recent financial statement: Inventories $ 205,000

Total assets $ 1,730,000

Current ratio 3.8

Acid-test ratio 2.80

Debt to equity ratio 1.5

Required:

Compute the current assets for Bronco:

Solutions

Expert Solution

Current ratio = Current Assets / Current Liabilities

Current Assets = 3.80 Current Liabilities

Acid-Test ratio = quick Assets / Current Liabilities

Quick Assets = Current Assets - Inventory

Quick Assets = Current Assets - $205,000

Substituting Quick assets Acid test ratio formula

2.80 = (Current Assets - $205,000) / Current Liabilities

2.8 * Current Liabilities = Current Assets - $205,000

2.8 * Current Liabilities = 3.80 current Liabilities - $205,000

1* Current Liabilities = $205,000

Current Liabilities = $205,000

Current Assets = 3.80 * $205,000 = $779,000

So, Current Assets = $779,000

ekkarill92 answered 2 years ago
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