Answer:
Current ratio = 2.25
Acid test ratio = 1.25
After Taking Loan
Current ratio = 1.64
Acid test ratio = 0.91
Explanation:
Current Ratio is the comparison of company's short term assets and short term liabilities to see if the company is able to pay its short term liabilities.
Current Ratio = Current Assets / Current Liabilities = $90,000 / $40,000 = 2.25 times
The company can pay 2.25 time the current liabilities from its current assets.
Asset test ratio compares company's most short term assets with most short term liabilities to check that if company is able to pay all the immediate liabilities it become due.
Acid Test ratio = ( 90,000 - 40,000 ) / 40,000 = 1.25
After taking the bank loan
Total current Liabilities = $15,000 + 40,000 = $55,000
Current ratio= $90,000 / $55000 = 1.64
Acid test ratio = $50,000 / $55000 = 0.91
