## FA Mod 4 Current ratio & quick ratio practice exam questions

 Author Message NEAS Supreme Being         Group: Administrators Posts: 4.2K, Visits: 1.2K FA Module 4 Current ratio & quick ratio practice exam questions(The attached PDF file has better formatting.)On December 30, a firm’s balance sheet shows●    non-current liabilities = 246●    shareholders’ equity = 364●    total assets = 732On December 30, the firm’s current ratio = 2.69 and its quick ratio = 2.26On December 31, the firm sells goods on credit (30 days net) for 160 at a gross profit margin of 44%, and it buys inventory for 80 on credit (60 days net).Question 4.2: Current liabilitiesWhat are current liabilities on December 30? Answer 4.2: 732 – 246 – 364 = 122(current liabilities = total assets – non-current liabilities – shareholders’ equity)Question 4.3: Current assetsWhat are current assets on December 30?Answer 4.3: 122 × 2.69 = 328.18(current assets = current liabilities × current ratio)Question 4.4: Quick assetsWhat are quick assets on December 30? Answer 4.4: 122 × 2.26 = 275.72(quick assets = current liabilities × quick ratio)Question 4.5: Inventory What is inventory on December 30? Answer 4.5: 328.18 – 275.72 = 52.46(inventory = current assets – quick assets)Question 4.6: Current liabilities What are current liabilities on December 31? Answer 4.6: 122 + 80 = 202(add change in accounts payable from purchase of inventory)Question 4.7: InventoryWhat is the change in inventory on December 31?Answer 4.7: 80 – 160 × (1 – 44%) = (9.60)(Add inventory bought and subtract inventory sold, which is goods sold × (1 – gross profit margin) )Question 4.8: Current assetsWhat are current assets on December 31? Answer 4.8: 328.18 + 160 – 9.60 = 478.58(Add change in accounts receivable and change in inventory)Question 4.9: Inventory What is inventory on December 31?Answer 4.9: 52.46 – 9.60 = 42.86(Add change in inventory)Question 4.10: Quick assetsWhat are quick assets on December 31? Answer 4.10: 478.58 – 42.86 = 435.72(quick assets = current assets – inventory)Question 4.11: Current ratio What is the current ratio on December 31? Answer 4.11: 478.58 / 202 = 2.369(current ratio = current assets / current liabilities)Question 4.12: Quick ratioWhat is the quick ratio on December 31? Answer 4.12: 435.72 / 202 = 2.157(quick ratio = quick assets / current liabilities) Attachments FA Module 4 Current ratio & quick ratio practice exam questions.pdf (170 views, 28.00 KB)
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