Table 15.2 The company earns 5 percent on current assets and 15 percent on fixed assets. The firm's current liabilities cost 7 percent to maintain and the average annual cost of long-term funds is 20 percent.
-The firm's initial ratio of current assets to total assets is ________. (See Table 15.2)
A) 3:1
B) 1:3
C) 2:1
D) 2:3

Question

Table 15.2  The company earns 5 percent on current assets and 15 percent on fixed assets. The firm's current liabilities cost 7 percent to maintain and the average annual cost of long-term funds is 20 percent.
-The firm's initial ratio of current assets to total assets is ________. (See Table 15.2)
A) 3:1 
B) 1:3 
C) 2:1 
D) 2:3

Quizplus · Accepted Answer

The ratio of current assets to total assets is calculated by dividing the total current assets by the total assets. Without the specific figures from Table 15.2, the correct answer cannot be determined. However, based on the question's structure, if B is indicated as the correct choice, it suggests that the initial ratio of current assets to total assets is 1:3, meaning for every unit of current assets, there are three units of total assets.

Table 152 the Company Earns 5 Percent on Current Assets