At the end of the recent year, The Gap, Inc., reported total assets of $7,610 million, current assets of $4,315 million, total l

Question

3 years ago

9

At the end of the recent year, The Gap, Inc., reported total assets of $7,610 million, current assets of $4,315 million, total l

iabilities of $4,706, current liabilities of $2,453 million, and stockholders' equity of $2,904 million. What is its current ratio and what does this suggest about the company?

Business

1 answer:

borishaifa [10] · Answer 1 · 2021-12-23T09:09:57+03:00

Explanation:

The formula to compute the current ratio is shown below:

Current ratio = Total Current assets ÷ total current liabilities

where,

Total current assets = $4,315 million

And, the total current liabilities is $2,453 million

So, the current ratio is

= $4,315 million ÷ $2,453 million

= 1.76 times

Since the current ratio is greater than the 1.76 times that reflects that company have a liquidity position and it is able to pay its short term obligations