Question

Southport Industries has current assets of $900,000 and a current ratio is 2.50. Assume that the company prepays rent for 9 months in the amount of $40,000. The current ratio after this transaction is closest to:

Answer 1

Answer:

2.50

Explanation:

Based on the information given we were told that the current ratio is 2.50 which means that the current ratio after this transaction is closest to: 2.50 reason been that based on the information given Increase in prepaid rent lead to decreae in cash which is why we won't have any change in the current ratio of 2.50

Therefore the current ratio after this transaction is closest to: 2.50