Sports Ltd reports the following information: $\begin{array}{lr}
\text { Net profit } & \$ 30,000 \
\text { Total assets } & 950,000 \
\text { Current liabilities } & 285,000 \
\text { Deferred liabilities } & 405,000
\end{array}$ If current assets represent 60% of total assets, Sports Ltd's current ratio is:
A)150%
B)67%
C)200%
D)50%

Question

Quizplus · Accepted Answer

The current ratio is calculated as current assets divided by current liabilities. Current assets are 60% of total assets, so $0.6 \times 950,000 = 570,000$. The current ratio is $570,000 / 285,000 = 2$ or 200%.

Sports Ltd Reports the Following Information If Current Assets Represent 60% of Total Assets, Sports Ltd's