Question

Ace Industries has a current assets equal to $3 illion . the company's current ratio is 1.5. and its quick ratio is 1.0.

What is the firm's level of current liabilities?

What is the firm's level of inventories?

Answer 1

$2,000,000

$1,000,000

Step-by-step explanation:

We know that

Current ratio = Total Current assets ÷ total current liabilities

1.5 = $3,000,000 ÷ total current liabilities

So, the total current liabilities would be

= $2,000,000

And

Quick ratio = Quick assets ÷ total current liabilities

1.0 = Quick assets ÷ $2,000,000

Quick assets = $2,000,000

So, the inventory would be

= Total current assets - quick assets

= $3,000,000 - $2,000,000

= $1,000,0000