Question

AAA Industries’ most recent balance sheet shows (in thousands of dollars) $200 cash, $400 marketable securities, $600 accounts receivable, $800 inventory, $1,300 net fixed assets, $500 accounts payable, and $700 notes payable. Based on these figures, what is the current ratio? A. 1.000 B. 2.750 C. 1.083 D. 2.083 E. 1.667

Answer 1

Answer:

E. 1.667

Explanation:

Current ratio is computed as;

= Current assets / Current liabilities

Current asset = Cash $200 + Marketable securities $400 + Accounts receivable $600 + Inventory $800

= $2,000

Current liabilities = Accounts payable $500 + Notes payable $700

= $1,200

Current ratio = $2,000 / $1,200

= 1.667