It should be noted that the working capital will be $1584000, the current ratio is 2.80 while the quick ratio is 2.20.
From the complete information, the working capital is calculated thus:
= Current asset - Current liabilities
= 2464000 - 880000
= 1584000
The current ratio will be:
= Total current asset / Total current liabilities
= 2464000 / 880000
= 2.80
The quick ratio will be calculated thus:
Total current asset = 2464000
Less: Inventory = 420000
Less: Prepaid expenses = 108000.
Total quick assets = 1936000
Total current liabilities = 8800000
Quick ratio = 2.20
Learn more about quick ratio on:
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