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23 March, 11:37

Wildhorse Corp. has total current assets of $12,152,000, current liabilities of $5,849,000, and a quick ratio of 0.94. How much inventory does it have?

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  1. 23 March, 11:43
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    Wildhorse Corp. has inventory of $6,653,940

    Explanation:

    The quick ratio is a liquidity ratio that indicates a company's ability to pay its current liabilities when they come due without needing to sell its inventory or get additional financing. The quick ratio is calculated by the following formula:

    Quick ratio = (Cash & equivalents + Short Term investments + Accounts receivable) / Current Liabilities

    (Cash & equivalents + Short Term investments + Accounts receivable) = Quick ratio x Current Liabilities = 0.94 x $5,849,000 = $5,498,060

    Inventory = Total current assets - (Cash & equivalents + Short Term investments + Accounts receivable) = $12,152,000 - $5,498,060 = $6,653,940
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