Question

Harrisonburg Company had current and total assets of $470,000 and $1,000,000, respectively. The company’s current and total liabilities were $267,000 and $600,000, respectively. Calculate the amount of working capital and the current ratio using this information. (Round your current ratio answer to 2 decimal places.)

Answer 1

Answer:

Working Capital= $203,000

Current ratio= 1.7603

Explanation:

Working capital is the liquid assets that are available to a business for the day-to-day operations. It is calculated by getting the difference between current assets and current liability.

Current asset= $470,000

Current liabilities= $267,000

Working capital = Current Assets - Current Liabilities

Working Capital= 470,000-267,000

Working Capital= $203,000

Current ratio is a liquidity ratio that measures a business's ability to pay it's short term liabilities.

Current ratio= Current Assets/ Current Liabilities

Current ratio= 470,000/ 267,000

Current ratio= 1.7603