Assume a company has working capital equal to $23,000 and total current liabilities equal to $75,000. The current ratio:
A)is 0.31.
B)is 1.31.
C)is 3.26.
D)cannot be determined from this information.

Question

Quizplus · Accepted Answer

Current ratio = Current assets / Current liabilities
We are given working capital = Current assets - Current liabilities
Thus, Current assets = Working capital + Current liabilities = $23,000 + $75,000 = $98,000
Current ratio = $98,000 / $75,000 = 1.31. Therefore, the answer is B.

Assume a Company Has Working Capital Equal to $23,000 and Total