Assume a company has a current ratio of 1.5 and working capital equal to $40,000.Total current assets are:
A) $120,000
B) $60,000
C) $80,000
D) $20,000

Question

Quizplus · Accepted Answer

The current ratio is calculated as Current Assets / Current Liabilities. Given a current ratio of 1.5 and working capital (Current Assets - Current Liabilities) of $40,000, we can set up the equation 1.5 = Current Assets / (Current Assets - 40,000). Solving for Current Assets gives $120,000.

Assume a Company Has a Current Ratio of 1