The following information pertains to Brock Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit.
Assets

Liabilities and Stockholders' Equity

Income Statement

What is the current ratio for this company?
A)1.42
B)0.78
C)1.58
D)0.67

Question

The following information pertains to Brock Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit.
Assets

Liabilities and Stockholders' Equity

Income Statement

What is the current ratio for this company?
A)1.42 
B)0.78 
C)1.58 
D)0.67

Quizplus · Accepted Answer

To calculate the current ratio, we divide current assets by current liabilities. From the balance sheet, we can see that the current assets are $214,700 and the current liabilities are $135,500. Therefore, the current ratio is:
$214,700/$135,500 = 1.58
This indicates that the company is able to meet its short-term obligations and has a healthy liquidity position.

The Following Information Pertains to Brock Company