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Question
In: Finance
What is the inventory turnover ratio for XYZ Corp. if COGS equals $9,000, current ratio equals 3.0,
What is the inventory turnover ratio for XYZ Corp. if COGS equals $9,000, current ratio equals 3.0, quick ratio equals 1.5, and the firm has $1,800 in current assets?
A. 10 times
B. 10 times
C. 8 times
D. 6 times
Solutions
Expert Solution
The option (b) is right option.
Explanation:
Current Ratio = Current Assets / Current Liabilities.
Current Liabilities
= Current Assets / Current Ratio
= 1,800 / 3
= $ 600
Quick Ratio = (Current Asset - Inventories) / Current Liabilities
1.5 = (1,800-Inventories) / 600
Inventories = 1800 - (1.5 x 600)
= $ 900
Inventory turnover ratio
= Cost of Goods sold / Inventories
= 9000 / 900
= 10 times
Hence, B is correct option.
The option (b) is right option.
Junaid answered 1 year agoRelated Solutions
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31
2013
2012
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