Question

SDJ, Inc., has net working capital of $2,060, current liabilities of $5,550, and inventory of $1,250. What is the current ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current ratio times What is the quick ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Quick ratio times

Answer 1

Answer: Current ratio = 1.37

Quick ratio = 1.15

Explanation:

The following can be deduced from the question:

Current assets is the addition of the net working capital and the current liabilities. This will be:

= $2060 + $5550

= $7610

The Current ratio will be the current assets divided by the current liabilities. This will be:

= $7610/$5550

Current ratio = 1.37

Quick ratio will be the subtraction of invention form the current asset and the result gotten is divided by the current liabilities. This will be:

= ($7610 - $1250)/$5550

= $6360/$5550

= 1.15