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Assume cash = $120, inventory = $470, accounts payable = $811, accounts receivable = $510, and total assets = $21,400. What is the current ratio?

Respuesta :

Answer:

1.36 times

Explanation:

The computation of the current ratio is shown below:

Current ratio = Total Current assets ÷ total current liabilities  

where,

Total current assets = Cash + inventory + account receivable

                                  = $120 + $470 + $510

                                  = $1,100

And the total current liabilities equal to account payable i.e $811

So, the current ratio would be

= $1,100 ÷ $811

= 1.36 times

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