Question

calculate the Current Ratio for the firm. acc payable: $345,000 acc rec: $735,000 short term portion...

calculate the Current Ratio for the firm.

acc payable: $345,000

acc rec: $735,000

short term portion of long-term debt $125,000

inventory: $225,000

income tax expense: $89,000

cash:$635,000

interest expense: $89,000

prepaid expense: $80,000

accrued payables: $125,000

Homework Answers

Answer #1
Calculation of current ratio:
Current ratio= current assets/current liabilities
Current assets= acc rec+inventory+cash+prepaid expense
                             =735000+225000+635000+80000=$1675000
Current liabilities= acc payable+short term portion of long term debt+accrued payables
                                   = 345000+125000+125000=$595000
Current ratio= 1675000/595000=2.82:1
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