Holliman Corp. has current liabilities of $426,000, a quick ratio of 1.40, inventory turnover of 3.90

Holliman Corp. has current liabilities of $426,000, a quick ratio of 1.40, inventory turnover of 3.90, and a current ratio of 3.10. What is the cost of goods sold for the company?

$1,013,880
$905,250
$2,824,380
$596,400
$5,150,340

The only ratio given which includes cost of goods sold is the inventory turnover ratio, so it is the last ratio used. Since current liabilities is given, we start with the current ratio:

Current ratio = 3.10 = CA / CL = CA / $426,000
CA = $1,320,600

Using the quick ratio, we solve for inventory:

Quick ratio = 1.40 = (CA – Inventory) / CL = ($1,320,600 – Inventory) / $426,000
Inventory = CA – (Quick ratio × CL)
Inventory = $1,320,600 – (1.40 × $426,000)
Inventory = $724,200
Inventory turnover = 3.90 = COGS / Inventory = COGS / $724,200
COGS = $2,824,380

A company has the right to buy back securities on the anniversary date of purchase at a specified price when the securities were issued. What impact does this feature have to the desirability of this security as an investment?

This will make the security less desirable as the company will purchase the security prior to its maturity if the interest rate decrease. This will make feasible for the company to buy back this security and this feature is normally considered as call feature.