Question

The smathers company has a long-term debt ratio (i.e., the ratio of long-term debt to long-term debt plus equity) of .54 and a current ratio of 1.43. current liabilities are $2,475, sales are $10,705, profit margin is 11 percent, and roe is 16 percent. what is the amount of the firm's current assets?

Answer 1

Calculation of amount of Current assets:

It is given that the Smathers Company has a current ratio of 1.43 and current liabilities are $2,475. We can calculate Current Assets with the help of following formula:

Current assets = Current Liabilities * Current Ratio

Current assets = 2475 * 1.43

Current assets = 3,539.25

Hence, Smathers Company’s current assets amount is $3539.25