In: Accounting
The following items are reported on a company's balance sheet:
Cash | $247,900 |
Marketable securities | 88,000 |
Accounts receivable | 261,900 |
Inventory | 192,700 |
Accounts payable | 278,100 |
Round your answers to two decimal places.
a.
Determine the current ratio.
b.
Determine the quick ratio.
Answer:-
a)- Current Ratio=Current Assets/ Current Liabilities
=$247900+88000+261900+192700/$278100
= $790500/$278100
=2.84 times
b) Acid-test (Quick ratio):- Current assets-Inventory-Prepaid expenses/Current Liabilities
=$790500-$192700/$278100
=$597800/$278100 =2.15 times