A corporation reports the following year-end balance sheet data. The company's current ratio equals: $$\begin{array} { l r l r }
\text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 75,000 \
\text { Accounts receivable } & 55,000 & \text { Lore-tern liabilities } & 35,000 \
\text { Irventory } & 60,000 & \text { Corrnon stock } & 100,000 \
\text { Equiprnent} &\underline{ 145,000 }& \text { Retained earnings } &\underline{ 90,000} \
\text { Total assets } &\underline{ \$ 300,000} & \text { Total liabilities ard equity } & \underline{\$ 300,000}
\end{array}$$
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: $$\begin{array} { l r l r } 
\text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 75,000 \
\text { Accounts receivable } & 55,000 & \text { Lore-tern liabilities } & 35,000 \
\text { Irventory } & 60,000 & \text { Corrnon stock } & 100,000 \
 \text { Equiprnent} &\underline{ 145,000 }& \text { Retained earnings } &\underline{ 90,000} \
 \text { Total assets } &\underline{ \$ 300,000} & \text { Total liabilities ard equity } & \underline{\$ 300,000}
\end{array}$$
A) 0.58
B) 1.27
C) 2.07
D) 0.37
E) 0.63

Quizplus · Accepted Answer

Current ratio is defined as current assets divided by current liabilities.

Current assets = Cash + Accounts receivable + Inventory
= 40,000 + 55,000 + 60,000
= 155,000

Current liabilities = Current liabilities + Notes payable
= 75,000 + 35,000
= 110,000

Current ratio = Current assets / Current liabilities 
= 155,000 / 110,000
= 1.41

Therefore, the current ratio is 1.41, which is closest to option (C) 2.07.

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