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Homework answers / question archive / 1
1. Compute current ratio and quick ratio of ABC, using the following given information:
Short term debt=$5,000
Account payable=$4,000
Cash=$5,000
Account receivable=$3,500
Inventory=$1,000
Current ratio = (current asset/ current liability)
= (5000+3500+1000)/(5000+4000)
=[9500/9000)= 1.0555
Quick ratio will be not including inventory is into the total quick asset
= (Quick asset/ current liability)
= (5000+3500)/9000)
= .9444
