Question

Calculating Liquidity Ratios SDJ, Inc., has net working capital of $1,965, current liabilities of $5,460, and inventory of $2,170. What is the current ratio? What is the quick ratio?
Net Working Capital	$      1,965.00
Current Liabilities	$      5,460.00
Inventory	$      2,170.00
Current Ratio
Quick Ratio

03.04 Calculating Inventory Turnover Bobaflex Corporation has ending inventory of $527,156 and cost of goods sold for the year just ended was $8,543,132. What is the inventory turnover? The days’ sales in inventory? How long on average did a unit of inventory sit on the shelf before it was sold?
Inventory	$     527,156.00
Cost of Goods Sold	$ 8,543,132.00
Inventory Turnover
Days' Sales in Inventory

Answer 1

Current ratio is computed as follows:

= Current Assets / Current Liabilities

Current Assets is as follows:

= Net Working capital + Current liabilities

= $ 1,965 + $ 5,460

= $ 7,425

So, the current ratio will be as follows:

= $ 7,425 / $ 5,460

= 1.36

Quick ratio is as follows:

= (Current Assets - Inventories) / Current Liabilities

= ($ 7,425 - $ 2,170) / $ 5,460

= 0.96

Inventory turnover is as follows:

= COGS / Inventory

= $ 8,543,132 / $ 527,156

= 16.20607941

Days sales in inventory is as follows:

= 365 / Inventory turnover

= 365 / 16.20607941

= 22.52 days