Barts Industries, Inc., has $30,000 in cash, $15,000 in short-term investments, $75,000 in net current receivables, and $12,000 in prepaid expenses. The total current liabilities of the firm are $90,000. Barts Industries' current ratio is:

Question

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The current ratio is calculated by dividing total current assets by total current liabilities. Current assets are $30,000 (cash) + $15,000 (short-term investments) + $75,000 (net current receivables) + $12,000 (prepaid expenses) = $132,000. The current ratio is $132,000 / $90,000 = 1.47.