Current position analysis Čurrent Position AnalysisThe following items are reported on a company's balance sheet:Cash$314,400Marketable securities245,600Accounts receivable (net)304,600Inventory117,900Accounts payable393,000Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place.a. Current ratiob. Quick ratio

Name: Current position analysis Čurrent Position AnalysisThe following items
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Description: Current position analysis Čurrent Position AnalysisThe following items are reported on a company's balance sheet:Cash$314,400Marketable securities245,600Accounts receivable (net)304,600Inventory117,900Accounts payable393,000Determine (a) the current

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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

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

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.

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

Current ratio = 2.5:1

Step 3 Answer

Answer: 2.5:1

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