Question

Highly Suspect Corp. has current liabilities of $419,000, a quick ratio of 1.80, inventory turnover of 4.20, and a current ratio of 3.30. What is the cost of goods sold for the company?

Answer 1

Quick ratio= Current assets - inventory / current liabilities

1.80 = Current asset - inventory / 419,000

Current asset - inventory = 1.80 × 419,000

= 754,200

Current ratio = Current asset / current liabilities

3.30 = Current assets / 419,000

Current asset = 3.30 × 419,000

= 1,382,700

Inventory = Current assets - (current asset - inventory)

= 1,382,700 - 754,200

= 628,500

Inventory turnover = Cost of goods sold / inventory

4.20 = COGS / 628,500

COGS = 4.20 × 628,500

= $2,639,700