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. Meteor Corp. has cash of $10,000, A/R of $50,000, Inventory of $125,000, A/P of $40,000,...

. 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?

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Homework Answers

Answer #1
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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