SDJ, Inc., has net working capital of $2,010, current liabilities of $5,570, and inventory of $1,255. Requirement 1: What is the current ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 3.16).) Current ratio times Requirement 2: What is the quick ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 3.16).) Quick ratio times Explanation: 1. To find the current assets, we must use the net working capital equation. Doing so, we find: NWC = Current assets – Current liabilities $2,010 = Current assets – $5,570 Current assets = $7,580 Now, use this number to calculate the current ratio and the quick ratio. The current ratio is: Current ratio = Current assets / Current liabilities Current ratio = $7,580 / $5,570 Current ratio = 1.36 times 2. And the quick ratio is: Quick ratio = (Current assets – Inventory) / Current liabilities Quick ratio = ($7,580 – 1,255) / $5,570 Quick ratio = 1.14 times

SDJ, Inc., has net working capital of $2,010, current liabilities of $5,570, and inventory of $1,255.

Requirement 1:

What is the current ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 3.16).)

Current ratio

times

Requirement 2:

What is the quick ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 3.16).)

Quick ratio

times

Explanation: 1.

To find the current assets, we must use the net working capital equation. Doing so, we find:

NWC	=	Current assets – Current liabilities
$2,010	=	Current assets – $5,570
Current assets	=	$7,580

Now, use this number to calculate the current ratio and the quick ratio. The current ratio is:

Current ratio	=	Current assets / Current liabilities
Current ratio	=	$7,580 / $5,570
Current ratio	=	1.36 times

2.

And the quick ratio is:

Quick ratio	=	(Current assets – Inventory) / Current liabilities
Quick ratio	=	($7,580 – 1,255) / $5,570
Quick ratio	=	1.14 times