The finance managers collected the following information for their firm: Total Assets = $60 000; Current Assets = $10 000; Long-term Liabilities = $100 000; Current Liabilities = $8000.What is the current ratio?
A)2.00
B)1.25
C)1.00
D)2.50

Question

The finance managers collected the following information for their firm: Total Assets = $60 000; Current Assets = $10 000; Long-term Liabilities = $100 000; Current Liabilities = $8000.What is the current ratio?
A)2.00
B)1.25
C)1.00
D)2.50

Quizplus · Accepted Answer

Current ratio = Current Assets / Current Liabilities

Current assets = $10 000 
Current liabilities = $8000

Current ratio = $10 000 / $8000 = 1.25

Therefore, the current ratio is 1.25.

The Finance Managers Collected the Following Information for Their Firm