A company has $200 in cash, $500 in accounts receivable, and $700 in inventory. If current liabilities are $400, then the current ratio would be

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. In this case, current assets are $200 + $500 + $700 = $1,400. Current liabilities are $400. Therefore, the current ratio is $1,400 / $400 = 3.50 to 1.

A Company Has $200 in Cash, $500 in Accounts Receivable