A company has cash, $85,000; temporary investments, $30,000; net receivables, $60,000; and inventory, $350,000. Current liabilities are $300,000. The current ratio is:

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. Current assets include cash, temporary investments, net receivables, and inventory, which total $525,000 ($85,000 + $30,000 + $60,000 + $350,000). Current liabilities are $300,000. Therefore, the current ratio is $525,000 / $300,000 = 1.75.

A Company Has Cash, $85,000; Temporary Investments, $30,000; Net Receivables