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Highly Suspect Corp. has current liabilities of $401,000, a quick ratio of 1.50, inventory turnover of 3.70, and a current ratio of 3.60. What is the cost of goods sold for the company?

User SGRao
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1 Answer

4 votes

Answer:

$3,115,770

Step-by-step explanation:

Given:

Current ratio = 3.60

Current liabilities = $401, 000

Quick ratio = 1.50

Inventory turnover = 3.70

Current ratio is calculated by dividing your current assets by your current liabilities.


Current\ ratio = (Current\ Assets)/(Current\ Liabilities)


3.60 = (Current\ Assets)/(401, 000)

Current Assets = 3.60 × 401,000

= $1,443,600


Quick\ ratio = ((Current\ Assets\ -\ Inventory))/(Current Liabilities)


1.50 = (1,443,600\ -\ Inventory)/(401,000)

1.50 × 401,000 = 1,443,600 - Inventory

601,500 = 1,443,600 - Inventory

Inventory = 1,443,600 - 601,500

= $842,100


Inventory\ Turnover = (Cost\ of\ Goods\ Sold)/(Inventory)


3.70 = (Cost\ of\ Goods\ Sold)/(842,100)

Cost of Goods Sold = 3.70 × 842,100

= $3,115,770

User Antony SUTHAKAR J
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