The Current Ratio of a company is 4.5 and its Quick Ratio (Acid Test Ratio) is 0.7. The only current assets on its Balance Sheet
The Current Ratio of a company is 4.5 and its Quick Ratio (Acid Test Ratio) is 0.7. The only current assets on its Balance Sheet are Cash, Accounts Receivables, and Inventory. From this data, it can be inferred that:
Current Liabilities are larger than their Current Assets
The company has high levels of long-term debt
Most of their current assets are made up of Cash and Accounts Receivables
Inventory forms a large part of their current assets
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Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
6th Edition
111919167X, 9781119191674
