A corporation reports the following year-end balance sheet data.The company's current ratio equals: $$\begin{array} { l r l r r }
\text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 5,000 \
\text { Accourts receivable } & 55,000 & \text { Long-temn liabilities } & 35,000 \
\text { Irventory } & 60,000 & \text { Cormon stock } & 100,000 \
\text { Equiprment } & \underline{145,000} & \text { Retaired earnirgs } & \underline{90,000} \
\text { Total assets } & \underline{\$ 300,000} & \text { Total liabilities ard equity } & \underline{\$ 300,000}
\end{array}$$
A)0.58
B)1.27
C)2.07
D)0.37
E)0.63

Question

A corporation reports the following year-end balance sheet data.The company's current ratio equals: $$\begin{array} { l r l r r } 
\text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 5,000 \
\text { Accourts receivable } & 55,000 & \text { Long-temn liabilities } & 35,000 \
\text { Irventory } & 60,000 & \text { Cormon stock } & 100,000 \
\text { Equiprment } & \underline{145,000} & \text { Retaired earnirgs } & \underline{90,000} \
\text { Total assets } & \underline{\$ 300,000} & \text { Total liabilities ard equity } & \underline{\$ 300,000}
\end{array}$$
A)0.58
B)1.27
C)2.07
D)0.37
E)0.63

Quizplus · Accepted Answer

The current ratio is calculated as Current Assets / Current Liabilities. Current Assets = Cash + Accounts Receivable + Inventory = $40,000 + $55,000 + $60,000 = $155,000. Current Liabilities = $5,000. Therefore, the current ratio = $155,000 / $5,000 = 31. This is a calculation error in the provided options, as none of them match the correct calculation. The correct approach, however, is shown.

A Corporation Reports the Following Year-End Balance Sheet Data A)058 B)1

A Corporation Reports the Following Year-End Balance Sheet Data A)058
B)1