Question

A Company has current assets of $1,650,000 and current liabilities of 780,000. Calculate and interpret the...

A Company has current assets of $1,650,000 and current liabilities of 780,000. Calculate and interpret the current ratio?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer :

Computation of Current ratio

Current ratio = Current Aseets / Current liabilities

= $ 1650000 / $ 780000

= 2.12 ( Approx to 2 Decimal place)

Explanation

Current ratio is a liquidity ratio it measures a company's ability to pay current liabilities with cash generated from current assets.In other words current ratio measures capability of business to meet it's short term obligation that are due within a year.

A company currently has a current ratio 2.12 ,Meaning it can easily settle current liability.A ratio of more  than 1 suggests Finanacial well - being for the company.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
2- Current and Quick Ratios The Nelson Company has $1,650,000 in current assets and $550,000 in...
2- Current and Quick Ratios The Nelson Company has $1,650,000 in current assets and $550,000 in current liabilities. Its initial inventory level is $385,000, and it will raise funds as additional notes payable and use them to increase inventory. A) How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 1.2? Round your answer to the nearest cent. $ B) What will be the firm's quick ratio after Nelson has raised the maximum amount of...
If current Assets for Company B in 2020 is 65,032 and current liabilities is 26,287, it's...
If current Assets for Company B in 2020 is 65,032 and current liabilities is 26,287, it's current ratio( current assets to liabilities ) is 2.47 which equals 247%. Therefore, does this result imply assets is more than 2x the coverage of liabilities?
Total Assets are $1,350,000; Total Current Liabilities are $250,000; the Current Ratio is 3.8. Calculate the...
Total Assets are $1,350,000; Total Current Liabilities are $250,000; the Current Ratio is 3.8. Calculate the firm's Net Fixed Assets. Round to the nearest dollar and do NOT enter a dollar sign.
Composite Solutions Company (CSC) has the following account balances:   Current assets $ 24,000     Current liabilities $...
Composite Solutions Company (CSC) has the following account balances:   Current assets $ 24,000     Current liabilities $ 10,000   Noncurrent assets 88,000     Noncurrent liabilities 48,000   Stockholders’ equity 54,000 The company wishes to raise $50,000 in cash and is considering two financing options: CSC can sell $50,000 of bonds payable, or it can issue additional common stock for $50,000. To help in the decision process, CSC’s management wants to determine the effects of each alternative on its current ratio and debt to assets...
Suppose a company starts with $8,000 in current assets and $4,000 in current liabilities. The company...
Suppose a company starts with $8,000 in current assets and $4,000 in current liabilities. The company then refinances $400 of long-term debt with short term debt. After the refinancing, what is the company's current ratio? Round your answer to 2 decimal places, for example 1.12.
Problem 8-9B Calculate and analyze ratios (LO8-6) Selected financial data regarding current assets and current liabilities...
Problem 8-9B Calculate and analyze ratios (LO8-6) Selected financial data regarding current assets and current liabilities for Ferris Air and Oceanic Airlines are provided as follows:      ($ in millions) Ferris Air Oceanic Airlines Current assets: Cash and cash equivalents $ 1,113 $ 2,791 Current investments 1,857 958 Net receivables 578 2,156 Inventory 469 1,023 Other current assets 210 1,344 Total current assets $ 4,227 $ 8,272 Current liabilities: Current debt $ 271 $ 1,627 Accounts payable 2,209 5,686 Other...
The Stewart Company has $1,895,500 in current assets and $777,155 in current liabilities. Its initial inventory...
The Stewart Company has $1,895,500 in current assets and $777,155 in current liabilities. Its initial inventory level is $454,920, and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0? Round your answer to the nearest dollar.
The Stewart Company has $1,666,500 in current assets and $633,270 in current liabilities. Its initial inventory...
The Stewart Company has $1,666,500 in current assets and $633,270 in current liabilities. Its initial inventory level is $399,960, and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0? Round your answer to the nearest cent.
The Stewart Company has $1,733,500 in current assets and $780,075 in current liabilities. Its initial inventory...
The Stewart Company has $1,733,500 in current assets and $780,075 in current liabilities. Its initial inventory level is $520,050, and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0? Round your answer to the nearest dollar.
The Nelson Company has $1,512,000 in current assets and $540,000 in current liabilities. Its initial inventory...
The Nelson Company has $1,512,000 in current assets and $540,000 in current liabilities. Its initial inventory level is $380,000, and it will raise funds as additional notes payable and use them to increase inventory. What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? (Do not round intermediate calculations. Round your answer to two decimal places.)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT