Answer:
current ratio:
C.2.6:1
Quick ratio:
1.9:1
Explanation:
Current Ratio measures the ability of a business to pay its short term debts.
Quick Ratio measures the ability of the business to measure the available of liquid assets to pay the immediate debts.
Current Assets = Cash + Cash at bank + Account Receivable + Prepayments + Inventory = $2,000 + $20,000 + $5,500 + $1,500 + $10,000 = $39,000
Current Liabilities = Account Payable + Wages Payable + Tax Payable = $12,000 + $1,500 + $1,500 = $15,000
Current ratio = Current assets / Current Liability = $39,000 / $15,000 = 2.6
Quick ratio = ( Current assets - Inventory )/ Current Liability = ( $39,000 - $10,000 ) / $15,000 = $29,000 / $15,000 = 1.9
