A firm's long term assets = $100,000, total assets =
$400,000, inventory = $50,000 and current liabilities = $200,000. Compute the current ratio and the quick ratio

Question

BlackTom AI · Accepted Answer

First, let’s restate what’s being asked and identify the given numbers for clarity. The problem provides: long-term assets = $100,000, total assets = $400,000, inventory = $50,000, and current liabilities = $200,000. We need to compute two liquidity measures: the current ratio and the quick ratio, and then compare with the provided options.
Option A says current ratio = 0.5 and quick ratio = 1.25. To evaluate, calculate current assets: total assets minus long-term assets = 400,000 − 100,000 = 300,000. The current ratio is current assets divided by current liabilities: 300,000 / 200,000 = 1.5, not 0.5. Therefore, this option misstates the current ratio right away, making it incorrect. 
Option B states current ratio = 1.0 and quick ratio = 2.0. Using the same current assets of 300,000 and current liabilities of 200,000, the current ratio is 1.5, not 1.0, so this option is incorrect due to the wrong current ratio value. 
Option C states current ratio = 1.5 and quick ratio = 1.25. This aligns with the calculations: current ratio = 300,000 / 200,000 = 1.5, and quick ratio = (current assets − inventory) / current liabilities = (300,000 − 50,000) / 200,000 = 250,000 / 200,000 = 1.25. This option matches both computed values, so it appears correct. 
Option D claims current ratio = 2.5 and quick ratio = 2.0. The current ratio would require current assets of 2.5 × 200,000 = 500,000, but we only have 300,000 in current assets, so 2.5 is inconsistent with the data; quick ratio of 2.0 would require even higher liquidity than feasible here. Thus, this option is inconsistent with the given numbers and is incorrect.
In summary, the only option that coherently reflects the supplied figures is the one stating current ratio 1.5 and quick ratio 1.25. The other options either misstate the computed ratios or rely on incorrect interpretations of current assets and liabilities, leading to arithmetic or conceptual errors.

A firm's long term assets = $100,000, total assets = $400,000, inventory = $50,000 and current liabilities = $200,000. Compute the current ratio and the quick ratio单项选择题

类似问题

Parsa's Organics currently has $56 in debt for every $100 in equity. If the company were to use some of its cash to purchase additional inventory, while maintaining its current equity and net income, which one of the following would decrease?

If a firm’s current ratio is increasing, it is likely that…

Financial ratios that measure the ability of a firm to meet its short-term commitments are known as ………… ratios.

Financial ratios that measure the ability of a firm to meet its short-term commitments are known as ………… ratios.

Which of the following actions would NOT affect the quick / liquid ratio of a firm?

GreenTech has a current ratio of 2.5, higher than the industry average of 1.8. What does this likely indicate about GreenTech relative to the industry average:

Even though Firm A's current ratio exceeds that of Firm B, Firm B's quick ratio might exceed that of A. However, if A's quick ratio exceeds B's, then we can be certain that A's current ratio is also larger than B's.

The two basic measures of liquidity are ROE and ROA.

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单