Determine inventories of a firm, Finance Basics

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A firm's current ratio is 1.5, and its quick ratio is 1.0. If its current liabilities are $10,000, what are its inventories?  

a

Current Ratio

   

1.5

 

(Current Assets/Current Liabilties)

 

b

Quick Ratio

   

1.0

c

Current Liabilities

   

 mce_markernbsp;                     10,000.00

d

Current Assets

   

 mce_markernbsp;                     15,000.00

 

(a x c)

       

e

As quick ratio,

     
 

(Current Assets - Stock)/Current Liabilties) = 1.0

 

($15,000 - Stock)/$10,000 = 1

   
 

$15000 - Stock = $10,000

   
 

Stock = $5,000

     

 

 


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