A firm has current liabilities of $500, a current ratio of 1.5, and a quick ratio of 1.1. calculate the level of inventory for this firm.

The inventory level will be used by an inventory manager to regulate the optimal time for manufacturing, if they are handling a manufacturer's warehouse, or to demand more if the product is being stored as stock at a store.

To solve this:

Get first the Current Assets this solved by multiplying the current liabilities to the current ratio.

CA = $500 (1.5) = $750

Then get the inventory level by multiplying the current asset to the product of the current liabilities and quick ratio.

Inventory level = $750 (500 x 1.1) = $412,500