Colton Corp. has current assets of $4.5 million. The current ratio is 1.25 and the quick ratio is 0.75. What is the amount of Colton's current liabilities (in millions)?
A) $4.5
B) $1.8
C) $2.4
D) $2.9
E) $3.6

Question

Quizplus · Accepted Answer

The current ratio is calculated as current assets divided by current liabilities. Given that Colton Corp. has a current ratio of 1.25 and current assets of $4.5 million, we can set up the equation 1.25 = $4.5 million / current liabilities. Solving for current liabilities gives us $4.5 million / 1.25 = $3.6 million.