Answer:
Explanation:
Current Assets are those asset which will be liquidated within next one year.
cash and marketable securities $360,000
accounts receivable $1,280,000
inventory <u>$2,180,000</u>
Total Current Assets <u>$3,820,000</u>
Current Liabilities are those which is payable within next one year.
accrued wages and taxes $540,000
accounts payable $840,000
notes payable <u>$680,000</u>
Total Current Liabilities <u>$2,060,000</u>
Current ratio measures the capability of a business to pay the current liabilities if it becomes due.
Current Ratio = Current Assets / Current Liabilities = $3,820,000 / $2,060,000 = 1.85 times
