Question

Determine the current ratio if current assets total $150,000, non-current assets are $205,000, current liabilities total $60,000, long-term liabilities total $80,000, and shareholder’s equity totals $215,000.

Answer 1

Answer:

The current ratio is 2.5:1

Explanation:

The current ratio is a relationship of the current assets and the current liabilities, and is normally expressed as a percentage.

Based on the  data provided in the question, it is calculated as under:

Total Current assets                  $ 150,000

Total Current Liabilities             $  60,000

The current assets are two and a half times of the current liabilities. Using the lower figure as a base. the current assets are ratio comes out to be

2.5 : 1.