A company has current assets of $4,400, current liabilities of $2,750, and long-term liabilities of $5,500. If the operating cash flow ratio is 1.5, then cash flows from operating activities must be
A)$4,125.
B)$6,600.
C)$8,250.
D)$12,375.

Question

Quizplus · Accepted Answer

The operating cash flow ratio is calculated by dividing cash flows from operating activities by current liabilities. Given the operating cash flow ratio is 1.5, we can find the cash flows from operating activities by multiplying the current liabilities ($2,750) by the ratio (1.5), which equals $4,125.

A Company Has Current Assets of $4,400, Current Liabilities of $2,750