Hardy Company has current assets of $95,000, current liabilities of $100,000, long-term assets of $180,000 and long-term liabilities of $80,000. Hardy Company's working capital and its current ratio are:
A) $85,000 and .95:1.
B) -$5,000 and 1.95:1.
C) $5,000 and .95:1.
D) -$5,000 and .95:1.

Question

Quizplus · Accepted Answer

Working capital is calculated as current assets minus current liabilities, which is $95,000 - $100,000 = -$5,000. The current ratio is calculated as current assets divided by current liabilities, which is $95,000 / $100,000 = 0.95:1.

Hardy Company Has Current Assets of $95,000, Current Liabilities of $100,000