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What is the amount of current liabilities

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Exercise - Answer each of the questions in the following unrelated situations.

(a) The current ratio of a company is 6:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $412,200, what is the amount of current liabilities?

(b) A company had an average inventory last year of $267,000 and its inventory turnover was 5. If sales volume and unit cost remain the same this year as last and inventory turnover is 8 this year, what will average inventory have to be during the current year?

(c) A company has current assets of $85,610 (of which $36,850 is inventory and prepaid items) and current liabilities of $36,850. What is the current ratio? What is the acid-test ratio? If the company borrows $13,080 cash from a bank on a 120-day loan, what will its current ratio be? What will the acid-test ratio be?

(d) A company has current assets of $611,400 and current liabilities of $225,500. The board of directors declares a cash dividend of $177,400. What is the current ratio after the declaration but before payment? What is the current ratio after the payment of the dividend?

Reference no: EM131941006

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