Using Ratios The following amounts were reported by Liquid Corporation in its most recent balance sheet:

a. Calculate the quick ratio and the current ratio for Liquid Corporation.

b. Based on a review of other companies in the industry, the management of Liquid Corporation thinks it should maintain a quick ratio of 1 or more and a current ratio of 2 or more. The ratios at the end of the prior year were 1.2 and 1.8, respectively. How successful has the company been in achieving the desired results this period?

c. How could the company improve its current position?

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Cash Accounts receivable Savings deposits Inventory $ 30,000 75,000 10,000 220,000 Prepaid insurance 30,000 Accounts payable 55,000 Wages payable 20,000 Income taxes payable 25,000