Question

Based on the following data, what is the current ratio, rounded to one decimal point?

Accounts payable $30,000
Accounts receivable 60,000
Accrued liabilities 5,000
Cash 40,000
Intangible assets 50,000
Inventory 69,000
Long-term investments 80,000
Long-term liabilities 100,000
Marketable securities 30,000
Fixed assets 670,000
Prepaid expenses 1,000

Answer 1

4.8

Step-by-step explanation:

The current ratio is = current assets / current liabilities

so this way a business´s current capital is expressed in the form of a ratio which measures its capacity to pay off the debts that are derived from the operating cycle.

current assets = 60.000+40.000 + 69.000 = 169.000

current liabilities = 30.000+ 5.000 = 35.000

Current ratio = 169.000/35.000 = 4.82

The current assets and current liabilities accounts must be identified

Accounts payable $30,000 - liability

Accounts receivable 60,000 - asset

Accrued liabilities 5,000 - liability -

Cash 40,000 - asset

Intangible assets 50,000 - not current

Inventory 69,000 -asset

Long-term investments 80,000 - not current

Long-term liabilities 100,000 - not current

Marketable securities 30,000 -not current ( but they also could be current)

Fixed assets 670,000 - not current

Prepaid expenses 1,000 -expense ( I understand that the payment was already made, therefore the liability was canceled and the asset we no longer have it)