. Meteor Corp. has cash of $10,000,
A/R of $50,000, Inventory of $125,000,
A/P of $40,000, Long-Term Debt of 500,000 and Net Fixed Assets
$625,000.
A. What is Meteor’s current ratio?
B. What is Meteor’s quick ratio?
Answer A | ||
current ratio = Current asset / Current liabilities | ||
Current asset = | ||
10000+50000+125000 | 185000 | |
Current liabilities = | 40000 | |
current ratio = | 4.625 | |
185000/40000 | ||
answer = | 4.625 | |
Answer B | ||
Quick ratio = (Current asset - Inventory)/Current liabilities | ||
Current asset - Inventory = | ||
185000-125000 | 60000 | |
Current liabilities = | 40000 | |
Quick ratio = | 1.50 | |
60000/40000 | ||
Answer = | 1.50 | |
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