Question
Assume that the current ratio for Arch Company is 2.5, its acid-test ratio is 2.0, and its working capital is $340,000. Answer each of the
Assume that the current ratio for Arch Company is 2.5, its acid-test ratio is 2.0, and its working capital is $340,000. Answer each of the following questions independently, always referring to the original information.
a. If the firm pays an account payable of $57,000, what will its new current ratio and working capital be? (Do not round intermediate calculations. Round "Current ratio" to 1 decimal place.)
b. If the firm sells inventory that was purchased for $50,000 at a cash price of $57,000, what will its new acid-test ratio be? (Do not round intermediate calculations. Round your answer to 1 decimal place.)
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