RBW Corp.has cash of $48,000; short-term notes payable of $35,000,accounts receivable of $100,000; accounts payable of $120,000; inventories of $200,000; and accruals of $90,000.What is RBW's current ratio?
A) 1.57
B) 2.71
C) 1.42
D) 0.64

Question

Quizplus · Accepted Answer

The current ratio is calculated as current assets divided by current liabilities. Current assets are $48,000 (cash) + $100,000 (accounts receivable) + $200,000 (inventories) = $348,000. Current liabilities are $35,000 (short-term notes payable) + $120,000 (accounts payable) + $90,000 (accruals) = $245,000. The current ratio is $348,000 / $245,000 = 1.42.

RBW CorpHas Cash of $48,000; Short-Term Notes Payable of $35,000,accounts Receivable