Question

clean water softener systems has cash of $600, accounts receivable of $900, and office supplies of $400. clean owes $500 on accounts payable and salaries payable of $200. cleans current ratio is

Answer 1

Answer:

Cleans current ratio is = 2.71

Explanation:

The current ratio is a liquidity ratio that measures whether a firm has enough resources to meet its short-term obligations.

Current asset is any asset which can reasonably be expected to be sold, consumed, or exhausted through the normal operations of a business within the current fiscal year or operating cycle.

Current liabilities are often understood as all liabilities of the business that are to be settled in cash within the fiscal year or the operating cycle of a given firm, whichever period is longer.

Current ratio = current assets ÷ current liabilities.

From the question above;

Current assets;

Cash $600

Account receivable $900

Office supplies $400

Total $1900

Current liabilities;

Account payable $500

Salaries payable $200

Total $700

Current ratio = 1900 ÷ 700

Current ratio = 2.71