Question

In: Finance

Water Works, Inc. has a current ratio of 1.33, current liabilities of $540,000, and inventory of...

Water Works, Inc. has a current ratio of 1.33, current liabilities of $540,000, and inventory of $400,000. What is Water Works, Inc.'s quick ratio?

a	1.11
b	0.86
c	1.90
d	0.59

Expert Solution

Solution :

We know that the formula for calculating the Current ratio is

Current Ratio = Current Assets / Current Liabilities

As per the information given in the question we have

Current ratio = 1.33

Current Liabilities = $ 540,000

Applying the above values in the current ratio formula we have

Current Assets / $ 540,000 = 1.33

Current Assets = 1.33 * $ 540,000

Thus Current Assets = $ 718,200

To find Quick Ratio :

The formula for calculating the quick ratio is

Quick Ratio = ( Current Assets – Inventory ) / Current Liabilities

As per the information given in the question we have

Current Assets = $ 718,200 ; Inventory = $ 400,000 Current Liabilities = $ 540,000

Applying the above values in the formula we have

Quick Ratio = $ 718,200 - $ 400,000 / $ 540,000

= $ 318,200 / $ 540,000

= 0.5893

= 0.59 ( when rounded off to two decimal places )

Thus the Quick Ratio of Water Work’s Inc. is = 0.59

Thus the solution is Option d. 0.59

jeff jeffy answered 2 years ago

Mandesa, Inc., has current liabilities of $9,100,000, current ratio of 1.8 times, inventory turnover of 10...

Mandesa, Inc., has current liabilities of $9,100,000, current ratio of 1.8 times, inventory turnover of 10 times, average collection period of 30 days, and credit sales of $63,999,999. Calculate the value of cash and marketable securities. (Use 365 days a year. Round your intermediate calculations and final answer to the nearest dollar amount.) Cash and marketable securities $

The Nelson Company has $1,620,000 in current assets and $540,000 in current liabilities

A put has a strike of S18. At expiry, the underlying asset of this put is expected to be either $25 or $10. Use the one-step binomial pricing model to calculate the premium of this put when the return is 1.05 and the upstate risk-neutral probability is 0.59.

Beakman, Inc has net working capital of $1,700, current liabilities of $4,100, and inventory of $2,900. What is the current ratio?

Beakman, Inc has net working capital of $1,700, current liabilities of $4,100, and inventory of $2,900. What is the current ratio? What is the quick ratio? (10 Points)(Use Excel and Excel Formulas)

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?

Calculating Liquidity Ratios SDJ, Inc., has net working capital of $1,965, current liabilities of $5,460, and inventory of $2,170. What is the current ratio? What is the quick ratio?Net Working Capital$ 1,965.00Current Liabilities$ 5,460.00Inventory$ 2,170.00Current RatioQuick Ratio03.04 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...

Below are some financial ratios of a firm: Current ratio: 1.33 Acid Test ratio: 0.79 Inventory...

Below are some financial ratios of a firm: Current ratio: 1.33 Acid Test ratio: 0.79 Inventory Turnover Ratio: 6.91 Provide a brief interpretation of this information.

Jacob Inc has the following ratios: Current Ratio = 1.85 Cash Ratio = .75 Jacob Inc has CURRENT LIABILITIES = $200....

Jacob Inc has the following ratios: Current Ratio = 1.85 Cash Ratio = .75 Jacob Inc has CURRENT LIABILITIES = $200. Assume that Jacob’s Current Assets consists of only Cash, Accounts Receivable, and Inventory. In other words, Current Assets = Cash and Accounts Receivable and Inventory. How much does Jacob hold in Accounts Receivable and Inventory?

Highly Suspect Corp. has current liabilities of $419,000, aquick ratio of 1.40, inventory turnover of...

Highly Suspect Corp. has current liabilities of $419,000, a quick ratio of 1.40, inventory turnover of 4.30, and a current ratio of 3.70. What is the cost of goods sold for the company?

Charlie’s Computer Connection (CCC) has current liabilities of $5,000, a quick ratio of 1.1, inventory turnover...

Charlie’s Computer Connection (CCC) has current liabilities of $5,000, a quick ratio of 1.1, inventory turnover of 8.0 and a current ratio of 1.2. What did CCC report for cost of goods sold? Select one: a. $500 b. $4,000 c. $4,214 d. $6,000 e. None of the above

SDJ, Inc., has net working capital of $1,960, current liabilities of $5,590, and inventory of $1,260....

SDJ, Inc., has net working capital of $1,960, current liabilities of $5,590, and inventory of $1,260. A. what is the current ratio? B. what is the quick ratio?

1. Holmes Inc. has a quick ratio of 0.70, current liabilities of $21,500, net working capital...

1. Holmes Inc. has a quick ratio of 0.70, current liabilities of $21,500, net working capital of $1200, and sales of $14,500. How much does it have in inventory? 2. Watson Co. has net income of $235,000, a return on assets of 12.5%, and a debt-equity ratio of 0.52. What is its return on equity? 3. Lestrade Plc. has net income of $16,000 and a profit margin of 8%. It also had costs (including depreciation) of $154,000 and a tax...