CMA Study Group

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  • 1.  fill in the blanks

    Posted 03-12-2020 07:04 PM
    Fill in the blanks on the basis of detail follows

    Current Ratio       2.5
    Quick Ratio (Acid test ratio)  1.75
    Current Liabilities   $500,000
    Inventory turn over    1

    Find out (1) The inventory for the company is ______________
                  (2) The Cost of goods sold is ________________

    ------------------------------
    Nikunj Sheth
    Controller
    BRAMPTON ON
    Canada
    ------------------------------


  • 2.  RE: fill in the blanks

    Posted 03-13-2020 04:57 AM
    Hello Nikunj,

    Current ratio = Current Assets / Current Liabilities
                      2.5 = Current Assets / $500,000 >>>> Current Assets = $1,250,000
    Quick ratio = Current Assets - Inventory / Current Liabilities
                     1.75 = $1,250,000 - Inventory / $500,000 >>>> Inventory = $1,250,000 - (1.75 x $500,000)
    Inventory = $375,000
    .
    Inventory turn over = COGS / Average Inventory
                                    1 = COGS / $375,0000
    COGS = $375,000

    Regards

    ------------------------------
    Samer Ahmad, FMVA, SCA
    Kuwait
    ------------------------------

    Original Message


  • 3.  RE: fill in the blanks

    Posted 03-13-2020 10:41 AM
    Current Ratio:  Current Assets (including inventory) / Current Liabilities = 2.5  
                             Current Assets (including inventory) / 500,000 = 2.5
                             Current Assets (including inventory) = 1,250,000

    Quick Ratio (Acid Test):  Current Assets (not including inventory) / Current Liabilities = 1.75
                                            Current Assets (not including inventory) / 500,000 = 1.75
                                            Current Assets (not including inventory) = 875,000

    Inventory = Current Assets (including inventory) - Current Assets (not including inventory) = 1,250,000 - 875,000 = 375,000

    Inventory Turnover:  COGS / Inventory = 1
                                     COGS / 375,000 = 1
                                     COGS = 375,000

    Therefore, 1) The inventory for the company is 375,000
                      2) The COGS is 375.000


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    Martha Walker
    Administrator
    Colleyville, TX
    United States
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    Original Message