Question

Philippe Organic Farms has total assets of $689,400, long-term debt of $198,375, total equity of $364.182, net fixed assets of $512,100, and sales of $1,021,500. The profit margin is 6.2 percent. What is the current ratio

Answer 1

Answer:

Current ratio= 1.3977

Explanation:

Current Ratio:

It is the measure of company ability to pay short term debits of one year. It also tells how company can increase its current assets.

Given:

Total assets=$689,400

Long-term debt=$198,375

Total equity= $364,182

Net fixed assets =$512,100

Sales = $1,021,500

Formula For current Ratio:

Current Ratio=$\frac{Total\ Assets-Net\ Fixed\ Assets}{Total\ Assets- long_term\ debt-total\ equity}$

$Current\ Ratio=\frac{\ 689,400-\ 512,000}{\ 689,400-\ 364,182-\ 198,375}\\ Current\ Ratio=1.3977$