Question

Financial Management  

Beach Wear has current liabilities of 350,000 a quick ratio of 1.65, inventory turnover of 4.7, and a current ratio of 2.9. what is the cost of goods sold?

Answer 1

Current Ratio = Current Assets / Current Liabilities

2.9 = Current Assets/ 350,000

Current Assets = 350,000*2.9

Current Assets = 1,015,000

Quick ratio = Quick Assets /Current Liabilites

1.65 = Quick Assets/ 350,000

Quick assets = 350000*1.65

Quick assets = 577,500

Inventory = Current Assets - Quick Assets

Inventory = 1,015,000-577,500

Inventory = 437,500

Cost od good sold = Inventory X inventory turnover

Cost of goods sold = 437,500*4.7

Cost of goods sold = 2,056,250