Compute the current ratio liquidity measures for year two

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Question - Jefferson Company had the following comparative current assets and current liabilities:

 

Dec. 31, Year 2

Dec. 31, Year 1

Current assets

 

 

Cash

$50,000

$45,000

Marketable securities

25,000

30,000

Accounts receivable

75,000

85,000

Inventory

40,000

50,000

Prepaid expenses

35,000

35,000

Total current assets

$225,000

$245,000

Current liabilities

 

 

Accounts payable

$85,000

$80,000

Salaries payable

25,000

30,000

Income tax payable

15,000

20,000

Total current liabilities

$125,000

$130,000

During Year 2, credit sales and cost of goods sold were $500,000 and $315,000, respectively.

Required - Compute the following liquidity measures for Year 2. If required, round your answers to two decimal places.

A. The current ratio

B. The quick ratio

C. The receivables turnover

D. The inventory turnover

Reference no: EM133091165

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