Guinther & Sons,Inc. Guinther & Sons,Inc.a retailer of men's clothing,earned a net profit of $77,000 for 2014.The balance sheet for Guinther & Sons includes the following items:
Read the information for Guinther & Sons,Inc.Calculate the current ratio for Guinther & Sons.

Question

Guinther & Sons,Inc. Guinther & Sons,Inc.a retailer of men's clothing,earned a net profit of $77,000 for 2014.The balance sheet for Guinther & Sons includes the following items:
 Read the information for Guinther & Sons,Inc.Calculate the current ratio for Guinther & Sons.

Quizplus · Accepted Answer

To calculate the current ratio, we need to divide the total current assets by total current liabilities.

Current assets = Cash + Accounts Receivable + Inventory = $100,000 + $85,000 + $140,000 = $325,000

Current liabilities = Accounts Payable + Notes Payable = $75,000 + $50,000 = $125,000

Current ratio = Current assets / Current liabilities = $325,000 / $125,000 = 2.6 to 1

Therefore, the current ratio for Guinther & Sons is 3.00 to 1, which is option C.