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$Q=\frac{A-I}{L}$ $\newline$ The formula gives the quick assets ratio $Q$ in terms of a company's current assets, $A$ ; inventories, $I$ ; and current liabilities, $L$ . Which of the following equations correctly gives the inventories in terms of the quick assets ratio, the current assets, and the current liabilities? $\newline$ Choose $1$ answer: $\newline$ (A) $I=QL-A$ $\newline$ (B) $I=A-QL$ $\newline$ (C) $I=L(Q-A)$ $\newline$ (D) $I=L(A-Q)$

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Velocity as a rate of change

Full solution

Q.

Q=\frac{A-I}{L}

\newline

The formula gives the quick assets ratio

Q

in terms of a company's current assets,

A

; inventories,

I

; and current liabilities,

L

. Which of the following equations correctly gives the inventories in terms of the quick assets ratio, the current assets, and the current liabilities?

\newline

Choose

1

answer:

\newline

(A)

I=QL-A

\newline

(B)

I=A-QL

\newline

(C)

I=L(Q-A)

\newline

(D)

I=L(A-Q)

Given Formula: We start with the given formula for the quick assets ratio: $\newline$ $Q = \frac{(A - I)}{L}$ $\newline$ We want to solve for $I$ , the inventories. To do this, we need to isolate $I$ on one side of the equation.
Multiply by L: First, we multiply both sides of the equation by $L$ to get rid of the denominator: $L \times Q = L \times \frac{A - I}{L}$ This simplifies to: $L \times Q = A - I$
Isolate $I$ : Next, we want to isolate $I$ , so we need to move $A$ to the other side of the equation by subtracting $A$ from both sides: $\newline$ $L \times Q - A = -I$
Multiply by $-1$ : Now, we multiply both sides by $-1$ to solve for $I$ :\-I \times -1 = (L \times Q - A) \times -1This simplifies to: $I = A - L \times Q$
Check Answer: We check the answer choices to see which one matches our derived equation for $I$ : $I = A - L \times Q$ The correct answer is (B) $I = A - QL$ .

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