Bass Tours
The following balances were taken from the company's records:
$$\begin{array} { l r l r }
\text { Inventory } & \$ 380,000 & \text { Accounts receivale } & \$ 190,000 \
\text { Land } & 290,000 & \text { Accounts payable } & 180,000 \
\text { Cash } & 129,000 & \text { Unearned revenue } & 110,000 \
\text { Prepaid rent } & 33,000 & \text { Common shares } & 312,000 \
\text { Retained eargings } & 220,000 & \text { Long-term notes payable } & 200,000
\end{array}$$
-Refer to the figure Bass Tours.If the average current ratio for similar companies is 2.0 to 1,what does this tell you about this company's liquidity?

Question

Bass Tours
The following balances were taken from the company's records:
 $$\begin{array} { l r l r } 
\text { Inventory } & \$ 380,000 & \text { Accounts receivale } & \$ 190,000 \
\text { Land } & 290,000 & \text { Accounts payable } & 180,000 \
\text { Cash } & 129,000 & \text { Unearned revenue } & 110,000 \
\text { Prepaid rent } & 33,000 & \text { Common shares } & 312,000 \
\text { Retained eargings } & 220,000 & \text { Long-term notes payable } & 200,000
\end{array}$$
-Refer to the figure Bass Tours.If the average current ratio for similar companies is 2.0 to 1,what does this tell you about this company's liquidity?

Quizplus · Accepted Answer

The current ratio for this company is 3.33 to 1, which is higher than the average current ratio for similar companies (2.0 to 1). This means that the company has more current assets relative to its current liabilities and is therefore more liquid than its competitors.

Bass Tours the Following Balances Were Taken from the Company's

Bass Tours
the Following Balances Were Taken from the Company's