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Current and Quick Ratios Ace Industries has current assets equal to $5 million. The company's current...

Current and Quick Ratios Ace Industries has current assets equal to $5 million. The company's current ratio is 2.0, and its quick ratio is 1.5. 1- What is the firm's level of current liabilities? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000 2-What is the firm's level of inventories? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000

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Answer #1

Current ratio = current assets / current liabilities

1) Current liabilities = current assets / 2

Current liabilities = $5,000,000 / 2

Current liabilities = 2,500,000

2) quick ratio = (current assets - inventory) / current liabilities

1.5 = ($5,000,000 - inventory) / $2,500,000

Inventory = 1,250,000

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