A firm’s total current assets are 18.3% of total assets, thecurrent ratio is 1.98, and...

A firm’s total current assets are 18.3% of total assets, the current ratio is 1.98, and the quick ratio is 1.46. What is the firm’s inventory, in % of assets? Round to the nearest 0.1%, drop the % symbol. E.g., if your answer is 5.45%, record it as 5.5.

Expert Solution

Current ratio = Current Assets / Current Liabilities

Quick Ratio = [ Current Assets - Inventory ] / Current Liabilities

Let X be the Current Liability

Current Assets = 1.98X

Quick Assets = 1.46X

Inventory = Current Assets - Quick Assets

= 1.98X - 1.46X

= 0.52X

Inventory as % of Current Assets = 0.52X / 1.98X

= 0.2626 I.e 26.26%

Inventory as % of Total Assets = 26.26% * 18.3%

= 4.8%

jeff jeffy answered 2 years ago

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