Smith Company has the following account balances: $\begin{array} { | l | r | }
\hline \text { Cash } & \$ 100,000 \
\hline \text { Accounts Receivable } & 30,000 \
\hline \text { Merchandise Inventory } & 250,000 \
\hline \text { Equipment } & 400,000 \
\hline \text { Accounts Payable } & 50,000 \
\hline \text { Bonds Payable } & 300,000 \
\hline
\end{array}$ Calculate Smith Company's current ratio.
A)8.0:1
B)7.6:1
C)2.2:
D)1.1:

Question

Smith Company has the following account balances: $\begin{array} { | l | r | } 
\hline \text { Cash } & \$ 100,000 \
\hline \text { Accounts Receivable } & 30,000 \
\hline \text { Merchandise Inventory } & 250,000 \
\hline \text { Equipment } & 400,000 \
\hline \text { Accounts Payable } & 50,000 \
\hline \text { Bonds Payable } & 300,000 \
\hline
\end{array}$ Calculate Smith Company's current ratio.
A)8.0:1
B)7.6:1
C)2.2:
D)1.1:

Quizplus · Accepted Answer

We need to calculate the current ratio which is Current Assets / Current Liabilities. We do not have the account balances to calculate this ratio.

Smith Company Has the Following Account Balances Calculate Smith Company's Current Ratio