Current liabilities 45000 inventory 24000 accounts receiva

Current liabilities = $45,000, inventory = $24,000, accounts receivable = $18,000, cash ratio = 0.36. 1) What is the current ratio? 2) What is the quick ratio? Please show worked out problem with all steps.

Solution

Current assets = 24000+18000+16200 = 58200

current liabilities = 45000

current ratio = current assets/current liabilities = 58200/45000 = 1.29

Quick ratio = quick assets/current liabilities = 34200/45000 =.76

Quick assets = total current assets-inventory = 58200-24000 = 34200

cash ratio = cash and cash equivalents / current liabilities = .36 = cash/45000 cash = 45000*.36 = 16200