1 answer

The following items are reported on a company's balance sheet: Cash $287,100 Marketable securities 102,900 Accounts...

Question:

The following items are reported on a company's balance sheet:

Cash $287,100
Marketable securities 102,900
Accounts receivable 274,600
Inventory 205,900
Accounts payable 278,200

Round your answers to two decimal places.

a. Determine the current ratio.
     

b. Determine the quick ratio.
     


Answers

a. Current Ratio
Current Assets / Current Liabilities = Current Ratio
                           870,500.00 /                 278,200.00 =                       3.13 :1
b. Acid Test Ratio
(Current Assets -Inventories) / Current Liabilities = Acid Test Ratio
(870,500 - 205,900) /                 278,200.00 =                       2.39 :1

Explanation:

Current assets
Cash 287,100.00
Marketable securities 102,900.00
Accounts receivable 274,600.00
Inventory 205,900.00
Total 870,500.00
Current Liabilities
Accounts payable 278,200.00
.

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