Homework Answers
4. Quick ratio is :
(Current assets - inventory) / current liabilities = 1.4
Current ratio :
Current assets/ Current liabilities = 3,
So, Current assets = 3* current liabilities,
since current assets = $810,000
Current liabilities = $2,70,000,
since, current assets = 3*current liabilities
3CL - Inventory = 1.4CL
3CL - 1.4CL = INVENTORY
1.6 * 2,70,000 = INVENTORY
4,32,000 = INVENTORY,
INVENTORY TURNOVER ,
COGS/ AVERAGE INVENTORY = 6,
Therefore, COGS = $2,592,000
The correct option is option A.
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