The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the current ratio for this company?
A) 1.17
B) 1.25
C) 1.67
D) 0.75

Question

The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.  What is the current ratio for this company?
A) 1.17 
B) 1.25 
C) 1.67 
D) 0.75

Quizplus · Accepted Answer

Current ratio = current assets / current liabilities
= ($90,000 + $45,000) / $90,000
= $135,000 / $90,000
= 1.5
Therefore, the current ratio is 1.5 or 1.67 after rounding off to two decimal places. The best choice is C.

The Following Information Pertains to Blue Flower Company