A firm reports a current ratio of 2 and a quick ratio of 1.2.The firm has total current assets of $4,000.If the firm reports cost of goods sold at $25,000 for the given year,what is the average age of their inventory?

Question

Quizplus · Accepted Answer

Current = 2 = CA/CL = $4000/CL,CL=$2000
Quick = 1.2 = ($4000-INV)/$2000
INV = $1,600
Inventory turn = $25000/$1600=15.625
Average age = 365/15.625=23.36

A Firm Reports a Current Ratio of 2 and a Quick