XYZ Ltd$.$ is considering two XYZ Ltd$.$ is a retail company facing working capital issues. The company's current balance sheet shows:

$$ Cash: $$200,000$

$$ Accounts Receivable: $$400,000$

$$ Inventory: $$600,000$

$$ Accounts Payable: $$300,000$

$$ Short$-$Term Debt: $$100,000$

XYZ Ltd$.$ has annual sales of $$5$ million and a cost of goods sold $($COGS$)$ of $$3$ million. The company wants to optimize its working capital and improve liquidity.

Question $1$:

Calculate XYZ Ltd$.$s current ratio and quick ratio.

$(10$ Marks$)$

Hint: Use the formulas:

$$ Current Ratio $=$ Current Assets $/$ Current Liabilities

$$ Quick Ratio $=($Current Assets $-$ Inventory$)/$ Current Liabilities