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?
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a
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Current Ratio
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1.5
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(Current Assets/Current Liabilties)
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b
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Quick Ratio
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1.0
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c
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Current Liabilities
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mce_markernbsp; 10,000.00
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d
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Current Assets
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mce_markernbsp; 15,000.00
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(a x c)
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e
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As quick ratio,
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(Current Assets - Stock)/Current Liabilties) = 1.0
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($15,000 - Stock)/$10,000 = 1
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$15000 - Stock = $10,000
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Stock = $5,000
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