Answer:
The Crimpson's current ratio is 1.32 times
Explanation:
Current Ratio: The current ratio is that ratio which meet short term liquidity. It comprises of two things i.e Current assets and current liabilities.
Current assets is that assets which are converted into cash in less than one year. It includes stock, accounts receivables, cash, etc
Current liabilities is that liabilities which are payable in less than one year. It includes creditors, accounts payable etc
Current ratio = current assets ÷ current liabilities
where,
current assets is equals to
= Cash + accounts receivable + inventory
= $125 + $245 + $160
= $530 million
And, current liabilities equals to
= Accounts payable + notes payable
= $120 + $280
= $400 million
We assume notes payable is less than 12 months so, we include in current liabilities
Now put these values over the above formula.
So, the current ratio = $530 ÷ $400 = 1.32 times
Hence, Crimpson's current ratio is 1.32 times
