Question

If current assets are $120,000, total assets are $600,000, current liabilities are $60,000, long-term debt is $340,000, and total liabilities are $400,000, what is the current ratio?

a. 1.5 to 1
b. 1.76 to 1
c. 2 to 1
d. None of the above

Answer 1

Answer:

C. 2 to 1

Explanation:

The formula for current ratio is

Current ratio = Current assets / Current liabilities.

Given that ;

Current assets = $120,000

Current liabilities = $60,000

Therefore,

Current ratio = $120,000 / $60,000

Current ratio = 2 to 1.

It therefore means that the current ratio is 2 to 1.