Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Given the following information, compute the current and quick ratios:
| Cash | $ | 150,000 |
| Accounts receivable | 308,000 | |
| Inventory | 485,000 | |
| Current liabilities | 500,000 | |
| Long-term debt | 583,000 | |
| Equity | 597,000 |
Round your answers to two decimal places.
Current ratio: :1
Quick ratio: :1
Expert Solution
Step 1
Liquidity ratio is the ability of the business to pay the amount due as and when they occurs. These are usually short term in nature. Liquidity ratio includes quick ratio and current ratio.
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