The current ratio for a company with current assets of $79,000, quick assets of $43,000, total assets of $197,000 current liabilities of $64,000 and net sales of $95,000 would be: (Round your final answer to two decimal places.)
A)0.67.
B)3.08.
C)1.23.
D)0.59.

Question

Quizplus · Accepted Answer

Current ratio = Current assets / Current liabilities

Current assets = Quick assets + Inventory
Total assets = Quick assets + Inventory + Other assets

Therefore, we can calculate:

Current assets = $43,000 + (Total assets - Quick assets) 
Current assets = $43,000 + ($197,000 - $43,000) 
Current assets = $153,000

Current ratio = $153,000 / $64,000
Current ratio = 2.39

Since the current ratio is not one of the listed answer choices, we can calculate the quick ratio:

Quick ratio = Quick assets / Current liabilities 
Quick ratio = $43,000 / $64,000
Quick ratio = 0.67

Therefore, the best choice is C) 1.23.

The Current Ratio for a Company with Current Assets of $79,000