Brankov Company has current assets of $95,000 and current liabilities of $110,000. The company decides to issue stock and receives cash of $100,000. After this transaction, the company's current ratio will be: (Round your final answer to two decimal places.)

Question

Quizplus · Accepted Answer

The current ratio is calculated as current assets divided by current liabilities. Initially, the current ratio is $95,000 / $110,000 = 0.86. After issuing stock and receiving $100,000, the current assets become $195,000, while current liabilities remain $110,000. The new current ratio is $195,000 / $110,000 = 1.77.

Brankov Company Has Current Assets of $95,000 and Current Liabilities