Sports Ltd reports the following information: $$\begin{array} { l l }
\text { Net profit } & \$ 30,000 \
\text { Total assets } & 950,000 \
\text { Current liabilities } & 285,000 \
\text { Deferred liabilities } & 405,000
\end{array}$$ If current assets represent 60% of total assets, Sports Ltd's current ratio is:
A)150%.
B)67%.
C)200%.
D)50%.

Question

Sports Ltd reports the following information: $$\begin{array} { l l } 
\text { Net profit } & \$ 30,000 \
\text { Total assets } & 950,000 \
\text { Current liabilities } & 285,000 \
\text { Deferred liabilities } & 405,000
\end{array}$$ If current assets represent 60% of total assets, Sports Ltd's current ratio is:
A)150%.
B)67%.
C)200%.
D)50%.

Quizplus · Accepted Answer

The current ratio is calculated as current assets divided by current liabilities. Current assets are 60% of total assets, so they are $570,000 (60% of $950,000). The current ratio is $570,000 / $285,000 = 2, or 200%.

Sports Ltd Reports the Following Information If Current Assets Represent 60% of Total Assets, Sports Ltd's