Question

A company's year-end data shows the following amounts. Current assets $65,000 Current liabilities $25,000 Net income $7,500 Net sales $125,000 Total assets $150,000 Based on this information, what is the company's current ratio?

Answer 1

The company's current ratio is 2.6.

What is the current ratio?

Current ratio is an example of a liquidity ratio. Liquidity ratios are financial ratios measure a firm's ability to honour its short terms obligations.

Current ratio = current asset /current liability

$65,000 / 25,000 = 2.6

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