Answer:
Current Liabilities = $2000000
Inventories = $800000
Explanation:
The current ratio and quick ratios both are measures to assess the liquidity position of businesses. These are useful indicators of how well the business is equipped to meet its current obligations using its most liquid assets.
The current ratio is calculated as follows,
Current Ratio = Current Assets / Current Liabilities
The quick ratio is calculated as follows,
Quick Ratio = (Current Assets - Inventories) / Current Liabilities
To calculate the inventory level, we must first determine the value of current liabilities using the current ratio.
1.5 = 3000000 / Current Liabilities
Current Liabilities = 3000000 / 1.5
Current Liabilities = $2000000
Using the quick ratio, we can calculate the level of inventories.
1.1 = (3000000 - Inventories) / 2000000
1.1 * 2000000 = 3000000 - Inventories
2200000 = 3000000 - Inventories
Inventories = 3000000 - 2200000
Inventories = $800000
