Question

Carla Vista Corp. has total current assets of $11,420,000, current liabilities of $4,354,000, and a quick ratio of 0.99. How much inventory does it have?

Answer 1

Answer:

Carla Vista Corp. has Inventory of $7,109,540

Explanation:

Carla Vista Corp. has current liabilities of $4,354,000, and a quick ratio of 0.99

The quick ratio is calculated by the following formula:

Quick ratio = (Cash & equivalents + Short Term investments + Accounts receivable)/Current Liabilities

(Cash & equivalents + Short Term investments + Accounts receivable) = Quick ratio x Current Liabilities  = $4,354,000 x 0.99 = $4,310,460

Total current assets = (Cash & equivalents + Short Term investments + Accounts receivable) + Inventory

Inventory = Total current assets - (Cash & equivalents + Short Term investments + Accounts receivable) = $11,420,000 - $4,310,460 = $7,109,540