Calculate the current ratio given the following information: cash = $12,000; total current assets = $28,000; cash ratio = 0.375.
A) 0.575
B) 0.675
C) 0.775
D) 0.875
E) 0.975

Question

Quizplus · Accepted Answer

The cash ratio is calculated as cash divided by current liabilities. Given the cash ratio is 0.375 and cash is $12,000, we can find current liabilities = $12,000 / 0.375 = $32,000. The current ratio is calculated as total current assets divided by current liabilities. Therefore, the current ratio = $28,000 / $32,000 = 0.875.

Calculate the Current Ratio Given the Following Information: Cash =