Question

Current & Quick Ratios: Ace Industries has current assets equal to $3 million. The company's current...

Current & Quick Ratios:

Ace Industries has current assets equal to $3 million. The company's current ratio is 1.5, and its quick ratio is 1.0. What is the firm's level of current liabilities? What is the firm's kevel of inventories?

Homework Answers

Answer #1
Current Asset Ratio = Current Assets / Current Liabilities
1.5 = $ 3 Million / Current Liabilities
Current Liabilities = $ 3 Million / 1.3
Current Liabilities = $ 2 Million
Answer = Current Liabilities = $ 2 Million
Quick Ratio = Current Assets - Inventory / Current Liabilities
1.0            =             $ 3 million - Inventory / $ 2 Million
$ 3 million - Inventory = $ 2 Million X 1 .0
$ 3 million - Inventory = $ 2 Million
Inventory = $ 3 Million - $ 2 Million
Inventory = $ 1 Million
Answer = Inventory = $ 1 million
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