# Question & Answer: For the FY 2016, Alpha Company's balance sheet included the following current items: cash \$50,000,…..

For the FY 2016, Alpha Company’s balance sheet included the following current items: cash \$50,000, accounts receivable \$170,000, inventories \$100,000, prepaid expenses \$25,000, accounts payable \$90,000, and accrued expenses \$70,000. Use this information to determine the: (Round & enter your answers to one decimal place for non-dollar ratios and enter the value. For dollar ratio enter as whole dollars only.)

1. Quick Ratio

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2. Current Ratio

2. Working Capita

Total current assets=(Cash+AR+Inventories+Prepaid expenses)

=(\$50,000+\$170,000+\$100,000+\$25000)=\$345000

Total current liabilities=(Accounts payable+Accrued expenses)

=(\$90,000+\$70,000)=\$160,000

2.Current ratio=Current assets/Current liabilities

=(\$345000-\$160,000)=2.15625.

=2.2(Approx).

3.Working capital=Current assets-Current liabilities

=(\$345000-\$160,000)=\$185000

1.Quick ratio=(Current assets-Inventory-Prepaid expenses)/Current liabilities

=(\$345000-100,000-25000)/160,000

=1.375.

=1.4(Approx).