Shown below are selected data from the balance sheet of Bill's Auto Parts, a retail store (dollar amounts are in thousands):
$$\begin{array} { | l | r | }
\hline \text { Cash } & \$ 130 \
\hline \text { Accounts receivable } & \$ 370 \
\hline \text { Inventory } & \$ 400 \
\hline \text { Total assets } & \$ 1,260 \
\hline \text { Current liabilities } & \$ 340 \
\hline \text { Non current liabilities } & \$ 280 \
\hline
\end{array}$$
-Refer to the above data. What is the current ratio?
A) 1.2 to 1.
B) Less than 2 to 1, but not 1.2 to 1.
C) 2.6 to 1.
D) More than 2 to 1, but not 2.6 to 1.

Question

Shown below are selected data from the balance sheet of Bill's Auto Parts, a retail store (dollar amounts are in thousands):
$$\begin{array} { | l | r | } 
\hline \text { Cash } & \$ 130 \
\hline \text { Accounts receivable } & \$ 370 \
\hline \text { Inventory } & \$ 400 \
\hline \text { Total assets } & \$ 1,260 \
\hline \text { Current liabilities } & \$ 340 \
\hline \text { Non current liabilities } & \$ 280 \
\hline
\end{array}$$
-Refer to the above data. What is the current ratio?
A) 1.2 to 1.
B) Less than 2 to 1, but not 1.2 to 1.
C) 2.6 to 1.
D) More than 2 to 1, but not 2.6 to 1.

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. In this case, current assets are $130 + $370 + $400 = $900, and current liabilities are $340. Therefore, the current ratio is $900 / $340 = 2.6 to 1.

Shown Below Are Selected Data from the Balance Sheet of Bill's