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a firm's current ratio is 1.4 and its quick ratio is 1.0. If its current liabilities...

a firm's current ratio is 1.4 and its quick ratio is 1.0. If its current liabilities are $10,400, what are its inventories?

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Answer #1
Current ratio = Current assets/Current liabilities
Current assets/Current liabilities = 1.4
Current liabilities = 10400
Current assets = (1.4*10400)
Current assets = $14560
Quick ratio = (Current assets - inventories)/Current liabilities
Quick ratio = (14560 - inventories)/10400
Quick ratio = 1
1 = (14560 - inventories)/10400
10400 = 14560 - inventories
inventories = 14560 - 10400
inventories = 4160.
Inventories are $4160.
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