Perkins Company has $56,000 in cash;$12,000 in Accounts Receivable;$25,000 in short-term investments and $100,000 in merchandise inventory.The company also has $60,000 in current liabilities.The company's current ratio is:

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. Current assets are $56,000 (cash) + $12,000 (accounts receivable) + $25,000 (short-term investments) + $100,000 (inventory) = $193,000. Current liabilities are $60,000. So, the current ratio is $193,000 / $60,000 = 3.217.

Perkins Company Has $56,000 in Cash;$12,000 in Accounts Receivable;$25,000 in Short-Term