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Čurrent Position Analysis The following items are reported on a company's balance sheet: Cash $314,400 Marketable securities 245,600 Accounts receivable (net) 304,600 Inventory 117,900 Accounts payable 393,000 Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place. a. Current ratio b. Quick ratio

Čurrent Position Analysis The following items are reported on a company's balance sheet: Cash $314,400 Marketable securities 245,600 Accounts receivable (net) 304,600 Inventory 117,900 Accounts payable 393,000 Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place. a. Current ratio b. Quick ratio

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Current position analysis

Čurrent Position Analysis The following items are reported on a company's balance sheet: Cash $314,400 Marketable securities 245,600 Accounts receivable (net) 304,600 Inventory 117,900 Accounts payable 393,000 Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place. a. Current ratio b. Quick ratio
Transcribed Image Text:Čurrent Position Analysis The following items are reported on a company's balance sheet: Cash $314,400 Marketable securities 245,600 Accounts receivable (net) 304,600 Inventory 117,900 Accounts payable 393,000 Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place. a. Current ratio b. Quick ratio
Expert Solution
Step 1 Introduction

Current Ratio: This ratio indicates that measures whether or not a firm has enough resources to meet its short term obligation. 

Formula

Accounting homework question answer, step 1, image 1

Quick Ratio: This ratio measures the ability of a company to pay its current liability through its near cash or quick assets.

Quick assets are those assets that can easily and very quickly be converted into cash. 

 

Accounting homework question answer, step 1, image 2

 

 

Step 2 b) Statement showing the current assets and current liabilities

Particular

Amount

($)

Current Assets

 

Cash

314,400

Marketable Securities

245,600

Account Receivable

304,600

Inventory

117,900

Current Assets

982,500

Current Liability

 

Account Payable

393,000

Current Liability

393,000

 

 

Accounting homework question answer, step 2, image 1

Current ratio = 2.5:1

 

Step 3 Answer

Answer: 2.5:1

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