Jenkins Company's current ratio is higher than the average for its industry,while its quick ratio is below the industry average.One possible interpretation for these results is that Jenkins carries less inventory than most companies in its industry.

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The current ratio,also called the working capital ratio,is calculated by dividing current assets by current liabilities.The quick ratio is a conservative variation of the current ratio.Only cash,receivables,and current marketable securities (quick assets)are included in the numerator.Less liquid current assets,such as inventories and prepaid expenses,are omitted.One possible interpretation for these results is that Jenkins carries more (rather than less)inventory than most companies in its industry.

Jenkins Company's Current Ratio Is Higher Than the Average for Its