Solstice Corporation has current assets of $10 million and current liabilities of $8 million. Solstice's current ratio is ________ and its net working capital is ________.
A) 1.25, $10 million
B) 1.25, $2 million
C) 2, $1.25 million
D) .8, ($2 million)

Question

Quizplus · Accepted Answer

Current ratio = Current assets / Current liabilities
Current ratio = $10 million / $8 million
Current ratio = 1.25

Net working capital = Current assets - Current liabilities
Net working capital = $10 million - $8 million
Net working capital = $2 million

Therefore, the correct answer is B because it provides the accurate current ratio and net working capital.

Solstice Corporation Has Current Assets of $10 Million and Current