The following items are reported on a company’s balance sheet: Cash $210,000 Marketable securities 120,000

The following items are reported on a company’s balance sheet:

Cash $210,000
Marketable securities 120,000
Accounts receivable (net) 110,000
Inventory 160,000
Accounts payable 200,000

Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place.

Answer:










a. Current Ratio  =  Current Assets ÷ Current Liabilities
Current Ratio  =  ($210,000 + $120,000 + $110,000 + $160,000) ÷ $200,000
Current Ratio  =  3.0
b. Quick Ratio  =  Quick Assets ÷ Current Liabilities
Quick Ratio  =  ($210,000 + $120,000 + $110,000) ÷ $200,000
Quick Ratio  =  2.2 

The following items are reported on a company’s balance sheet:

Cash $130,000
Marketable securities 50,000
Accounts receivable (net) 60,000
Inventory 120,000
Accounts payable 150,000

Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place.

Answer:









a. Current Ratio = Current Assets ÷ Current Liabilities
Current Ratio = ($130,000 + $50,000 + $60,000 + $120,000) ÷ $150,000
Current Ratio = 2.4
b. Quick Ratio = Quick Assets ÷ Current Liabilities
Quick Ratio = ($130,000 + $50,000 + $60,000) ÷ $150,000
Quick Ratio = 1.6