Question

If the Golden Braid Bookstore has a current (or working capital) ratio of 8.25:1, $40,000 in accounts receivable, $340,000 in cash, $65,000 in accounts payable and $15,000 in other current liabilities, how much inventory do they have?

Answer 1

Answer:

Inventory value = $280,000

Explanation:

given data

current ratio = 8.25 : 1

accounts receivable = $40,000

cash = $340,000

accounts payable = $65,000

current liabilities = $15,000

to find out

how much inventory do they have

solution

                                         Current asset      Current liabilities

Present current ratio            8.25                    1

Total current liabilities                                      $80,000

Total current assets          $660,000

so here Inventory value will be as

Inventory value = Total current assets - Cash - Accounts receivable ..........1

Inventory value = $660,000 - $340,000 - $40,000

Inventory value = $280,000