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Genrish500 [490]
3 years ago
5

The Balance sheet of Mister Ribs Restaurant reports current assets of $30,000 and current liabilities of $15,000.a. Calculate th

e current Ratio.b. Does it appear likely that Mister Ribs will be able to pay its current liabilities as they come due in the next year?
Business
1 answer:
Pani-rosa [81]3 years ago
4 0

Answer:

<u>Current Ratio = 2; Yes</u>

Explanation:

First, to solve for current ratio, simply divide the current assets by the current liabilities.

So the current ratio would be $30,000 / $15,000 resulting to <em><u>2</u></em>

Now, a current ratio greater than one means that <u>Mister Ribs will be able to pay its current liabilities as they come due in the next year.</u>

However, because the current ratio at any one time is just a snapshot, it is usually not a complete representation of a company’s liquidity or solvency.

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