A company has current liabilities of $500 million, and its current ratio is 2.0. What is the total of its current assets? ($1,000 million) If this firm’s quick ratio is 1.6, how much inventory does it have? ($200 million) (To answer this problem and some of the other problems in this chapter, write out the equation for the ratio in the question, insert the given data, and solve for the missing value.) Examples:

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Current ratio = 2.0 = CA/CL = CA/$500, so CA = 2($500) = $1,000. Quick ratio = 1.6 = (CA - Inventories)/CL = ($1,000 Inventories)/$500, so $1,000 - Inventories = 1.6($500) and Inventories= $1,000 - $800 = $200.