Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Robertson Robotics has a current ratio of 2.0 and its quick ratio is 1.6. The company has $5-million in current liabilities. The company's inventory turnover

Robertson Robotics has a current ratio of 2.0 and its quick ratio is 1.6. The company has $5-million in current liabilities. The company's inventory turnover ratio is 5 . The company wants to improve its inventory turnover ratio so that it is equal to the industry average of 6.0, without changing its sales. Assume that the company is able to do this, and that the company uses the freed up cash from the decline in inventory to reduce its accounts payable. 

What would be the company's quick ratio after this change?



Step by Step Solution

3.34 Rating (160 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the companys quick ratio after the change we need to determine the new level of inventory and accounts payable The current quick ratio is ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

12th edition

134725980, 9780134726656 , 978-0134725987

More Books

Students also viewed these Finance questions