A company had the following partial list of assets and liabilities: $$\begin{array} { l r }
\text { Cash } & \$ 5,000 \
\text { FVTOCI securities } & 15,000 \
\text { Accounts receivable } & 75,000 \
\text { Inventory } & 32,500 \
\text { Prepaid insurance } & 2,500 \
\text { Accounts payable } & 18,500 \
\text { Unearned revenue } & 20,000 \
\text { Current portion of long-term debt } & 5,000
\end{array}$$ What is their current ratio closest to?
A)2.2
B)2.5
C)3.0
D)3.4

Question

A company had the following partial list of assets and liabilities: $$\begin{array} { l r } 
\text { Cash } & \$ 5,000 \
\text { FVTOCI securities } & 15,000 \
\text { Accounts receivable } & 75,000 \
\text { Inventory } & 32,500 \
\text { Prepaid insurance } & 2,500 \
\text { Accounts payable } & 18,500 \
\text { Unearned revenue } & 20,000 \
\text { Current portion of long-term debt } & 5,000
\end{array}$$ What is their current ratio closest to?
A)2.2
B)2.5
C)3.0
D)3.4

Quizplus · Accepted Answer

Current assets = $5,000 + $15,000 + $75,000 + $32,500 + $2,500 = $130,000Current liabilities = $18,500 + $20,000 + $5,000 = $43,500Current ratio = Current assets / Current liabilities = $130,000 / $43,500 = 2.99

A Company Had the Following Partial List of Assets and Liabilities