A firm current ratio is 1. 0 and its quick ratio is 1. 0. If current liabilities are 12300, what are its inventories?

1 answer:

4 0

A firm current ratio is 1. 0 and its quick ratio is 1. 0. If current liabilities are 12300 then its inventories will be 12300

Inventory is the accounting of items, component parts and raw materials that a company either uses in production or sells

The quick and current ratios are liquidity ratios that help investors and analysts gauge a company's ability to meet its short-term obligations. The current ratio divides current assets by current liabilities. The quick ratio only considers highly-liquid assets or cash equivalents as part of current assets.

current ratio = current assets / current liabilities

current assets = current ratio * current liabilities

= 1 * 12300 = 12300

since , inventory is a current asset for accounting purpose , hence inventories will be 12300

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