Question

Highly Suspect Corp. has current liabilities of $412,000, a quick ratio of 1.70, inventory turnover of 4.00, and a current ratio of 3.30. What is the cost of goods sold for the company?

Answer 1

Current ratio = Current assets / current liabilities

3.3 = Current assets / 412,000

Current assets = 1,359,600

Quick ratio = (Current assets - inventory) / Current liabilities

1.7 = (1,359,600 - inventory) / 412,000

700,400 = 1,359,600 - inventory

Inventory = 659,200

Inventory turnover = Cost of goods sold / Inventory

4 = Cost of goods sold / 659,200

Cost of goods sold = 2,636,800