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SDJ inc has a net working capital of 2135, current liabilities of 2153, current liabilities of...

SDJ inc has a net working capital of 2135, current liabilities of 2153, current liabilities of 5320, and inventory of 2470, what is the current ratio? What is the quick ratio?

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Answer #1

Ans:- In this question there are two current liabilities are given, therefore we will solve for each one.

The current ratio is given by Current Assets / Current Liabilities.

(a)If Current liabilities is 2153, then

we know that current asset = Current liabilities + Net-working capital = 2153 + 2470 = 4623

Current Ratio = 4623 / 2153 = 2.15

Quick ratio is given by (Current Asset - Inventory) / current liabilities = (4623- 2470) / 2153 = 1.00

(b) If Current Liabilities is 5320, then

Current Asset = 5320 + 2135 = 7455

Current Ratio = 7455 / 5320 = 1.40

Quick ratio = (7455 - 2470) / 5320 = 0.94

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