Question

Last year, Capriana Corporation (CC) had sales of $200 million, and its inventory turnover ratio was 5.0. The CC’s current assets totaled $100 million, and its current ratio was 1.2. What was CC’s quick ratio?

Answer 1

quick ratio = 0.72

Step-by-step explanation:

given data

sales = $200 million

inventory turnover ratio = 5.0

current assets totaled = $100 million

current ratio = 1.2

solution

we get here quick ratio so here

inventory turnover ratio =
`(sales)/(inventory)` ...............1

put here value

inventory =
`(200)/(5)`

inventory = 40

and

now we get current liability

current ratio =
`(current\ assets)/(current\ liability)` ...............2

put here value

current liability =
`(100)/(1.20)`

current liability = 83.33

and here quick ratio

quick ratio =
`(current\ assets - inventory)/(current\ liability)` .............3

quick ratio =
`(100-40)/(83.33)`

quick ratio = 0.72