Answered: The current ratio of a company is 4:1,…

The current ratio of a company is 4:1, and its acid-test ratio is 1.5:1. If the inventories and prepaid items amount to $625,000, what is the amount of current liabilities?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 6MCQ

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Question

Please provide the correct solution to this financial accounting question using valid principles.

The current ratio of a company is
4:1, and its acid-test ratio is
1.5:1. If the inventories and
prepaid
items amount
to
$625,000, what is the amount of
current liabilities?

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