A company has long-term assets of $2,000, current liabilities of $1,250, and long-term liabilities of $1,500. If the current ratio is 2.5, then current assets must be
A)$5,000.
B)$3,125.
C)$1,563.
D)$500.

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. We are given that the current ratio is 2.5, therefore:
Current ratio = Current assets / Current liabilities
2.5 = Current assets / 1,250
Current assets = 2.5 x 1,250
Current assets = $3,125

A Company Has Long-Term Assets of $2,000, Current Liabilities of $1,250