Question

Hardy Company has current assets of $95,000, current liabilities of $100,000, long-term assets of $180,000 and long-term liabilities of $80,000. Hardy Company's working capital and its current ratio are: A. -$5,000 and .95:1. B. $5,000 and .95:1. C. -$5,000 and 1.95:1. D. $85,000 and .95:1.

Answer 1

Answer:

A. -$5,000 and .95:1

Explanation:

Working capital = Current Assets - Current Liabilities

Provided current assets = $95,000

Current Liabilities = $100,000

Working capital = $95,000 - $100,000 = - $5,000

Current Ratio = $\frac{Current \: Assets}{Current\: Liabilities}$

Therefore, Current Ratio = $\frac{95,000}{100,000} = 0.95:1$

Here working capital is negative $5,000

Current Ratio = 0.95 : 1

Final Answer

A. -$5,000 and .95:1