Answer:
a. The current ratio: 3.0
b. The quick ratio: 2.2
Explanation:
a. The current ratio is calculated by using following formula:
Current Ratio = Current Assets / Current Liabilities
In the company,
Current Assets = Cash + Marketable securities + Accounts receivable + Inventory = $210,000 + $120,000 + $110,000 + $160,000 = $600,000
Current Liabilities = Accounts payable = $200,000
Current Ratio = $600,000/$200,000 = 3.0
b. The quick ratio is calculated by the following formula:
Quick ratio = (Cash & equivalents + Short Term investments + Accounts receivable)/Current Liabilities = ($210,000 + $120,000 + $110,00)/$200,000 = 2.2