Question

In: Accounting

The following items are reported on a company's balance sheet: Cash $247,900 Marketable securities 88,000 Accounts...

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.
     

Solutions

Expert Solution

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


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