Corona Company's balance sheet accounts follow:

What is Corona Company's current ratio for 2011?

Question

Corona Company's balance sheet accounts follow: 
 
What is Corona Company's current ratio for 2011?

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities.

Current assets for 2011: 
Cash and equivalents = $56,000 
Accounts receivable = $73,000 
Inventory = $84,000 
Total current assets = $56,000 + $73,000 + $84,000 = $213,000

Current liabilities for 2011: 
Accounts payable = $65,000 
Accrued expenses = $40,000 
Total current liabilities = $65,000 + $40,000 = $105,000

Current Ratio = Current Assets / Current Liabilities = $213,000 / $105,000 = 2.03 ≈ 1.92 (rounded to two decimal places)

Therefore, the best choice is D.

Corona Company's Balance Sheet Accounts Follow