Current Liabilities Solutiona Inventory and prepaid item to

Current Liabilities

$

Solution

(a)

Inventory and prepaid item total

511000

Inventory and prepaid items are diffrence between current assets and quick assets

Current liabilities are ($ 511000/5)

               $ 102,200.00

(b)

Average Inventory

203000

Inventory Turnover

6 times

Cost of Goods sold (Average inventory * Inventory Turnover)

1218000

Current year Inventory Turnover ratio

8 Times

Average inventory (CoGS/8)

$         152,250.00

(c )

Current ratio

Current Assets /Current Liabilities

Current ratio

(93000/38000)

Current ratio

2.45:1

Quick ratio

(Cash+ Accounts receivables+ short term securities)/Current liabilities

Quick ratio

(55000/38000)

Quick ratio

1.45:1

Change due to borrowings

Short term loan is taken. Current asset and current liabilities both will increase

Current ratio remains same

2.45:1

Acid test ratio or Quick ratio

(69000/52000)

Acid test ratio or Quick ratio

1.33:1

(d)

Current Assets

Current Liabilities

Balance

$ 558000

$ 221000

Add:Divident declaration

$ 174000

New balances

$ 558000

$ 395000

Didedent paid

$ -174000

$ -174000

Balance after Divident payment

$ 384000

$ 221000

Current ratio After dividend declaration

(558000/395000)

1.41

Current ratio After dividend payment

(384000/221000)

1.74

(a)	Inventory and prepaid item total	511000
	Inventory and prepaid items are diffrence between current assets and quick assets
	Current liabilities are ($ 511000/5)	$ 102,200.00