Question

Cash $280,000 Marketable Securities 131,000 Accounts and Notes Receivable (net) 395,000 Inventories 570,000 Prepaid Expenses 19,000 Accounts and Notes Payable (short-term) 250,000 Accrued Liabilities 60,000 What is the Current Ratio

Answer 1

Answer:Current Ratio=4.5

Explanation:

Current Ratio = Current Assets / Current Liabilities

 

Current assets = Cash + Marketable Securities + Accounts and Notes Receivable+  Inventories +  Prepaid expenses

= $280,000 +$131,000 + $395,000  + $570,000 +  19,000=$1,395,000

Current liabilities = Accounts and Notes Payable (short-term) + Accrued Liabilities

=$250,000 + $60,000= $310,000

Current ratio = $1,395,000 /  $310,000= Current Ratio