The "current ratio" of a company is the ratio of its current assets to its current liabilities.Suppose a company has current assets of $250,000 and current liabilities of $100,000.If the company wants to make a short-term loan and have their current ratio no less than 2.2,what is the maximum amount it can borrow? (Note: The funds they receive are considered as current assets and the loan as a current liability.)
A) $15,000
B) $20,000
C) $25,000
D) $30,000
E) $33,000

Question

Quizplus · Accepted Answer

To maintain a current ratio of 2.2, the equation is (250,000 + x) / (100,000 + x) = 2.2. Solving for x gives x = $25,000.

The "Current Ratio" of a Company Is the Ratio of Its