Dooley Company had current assets of $1592, current liabilities of $1423, total assets of $1692, and long-term liabilities of $1210. If Dooley acquires inventory by executing a six-month note for $1500, what is the new current ratio? (Round your final answer to two decimal places.)

Question

Quizplus · Accepted Answer

The current ratio is calculated as current assets divided by current liabilities. After acquiring inventory with a six-month note, current assets increase by $1500, and current liabilities also increase by $1500. The new current assets are $3092 ($1592 + $1500), and the new current liabilities are $2923 ($1423 + $1500). The new current ratio is $3092 / $2923 = 1.06.

Dooley Company Had Current Assets of $1592, Current Liabilities of $1423