Question -
(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 $503,000, what is the amount of current liabilities?
(b) A company had an average inventory last year of $220,000 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 $90,000 (of which $36,000 is inventory and prepaid items) and current liabilities of $36,000. What is the current ratio? What is the acid-test ratio? If the company borrows $16,000 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 $589,000 and current liabilities of $263,000. The board of directors declares a cash dividend of $198,000. What is the current ratio after the declaration but before payment? What is the current ratio after the payment of the dividend?