Question

SDJ, Inc., has net working capital of $2,135, current liabilities of $5,320, and inventory of $2,470.SDJ, Inc., has net working capital of $2,135, current liabilities of $5,320, and inventory of $2,470.
a. What is the current ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is the quick ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

1)

Net working capital = Current assets - current liabilities

2,135 = Current assets - 5,320

Current assets = 7,455

Current ratio = Current assets / current liabilities

Current ratio = 7,455 / 5,320

Current ratio = 1.40

2)

Quick ratio = (Current assets - inventory) / current liabilities

Quick ratio = (7,455 - 2,470) / 5,320

Quick ratio = 0.94