1. If a company is having difficulty meeting its payroll and accounts payable obligations, but has a current ratio that is consistent with industry standards, what could be their problem, what would be your recommendation? Please cite any sources you use.
2. Assume the following: Cost of goods sold = $130,000; Purchases = $170,000; Beginning inventory = $40,000; Ending inventory = $80,000; Current assets = $240,000. Required: Calculate the average inventory, as used when calculating inventory turnover. Correct answer is:
60000
80000
120000
210000