A retailer has $300,000 in cash,$500,000 in accounts receivable,$1,000,000 in inventories,$400,000 in marketable securities,and $2,000,000 in total current liabilities.What is its current ratio?

Question

Quizplus · Accepted Answer

Current ratio = (current assets) / (current liabilities)
Current assets = cash + accounts receivable + inventories + marketable securities = 300,000 + 500,000 + 1,000,000 + 400,000 = 2,200,000
Current ratio = 2,200,000 / 2,000,000 = 1.1
Therefore, the current ratio is 1.100, which means the company has sufficient current assets to cover its current liabilities.

A Retailer Has $300,000 in Cash,$500,000 in Accounts Receivable,$1,000,000 in Inventories,$400,000