Question

The financial statements of Weston Office Supply include the following​ items:20172016Cash​ $43,500​ $50,000Shortminus−term Investments​ 27,000​17,000Net Accounts Receivable​ 102,000​97,000Merchandise Inventory​125,000​119,000Total Assets​527,000​554,000Total Current Liabilities​251,000​242,000​Long-term Note Payable​59,000​51,000What is 2017 current​ ratio? (Round your answer to two decimal​ places.

Answer 1

The current ratio is 1.18 times

Step-by-step explanation:

Current Ratio: The current ratio is that ratio which shows a relationship between the current assets and the current liabilities

The computation of the current ratio is shown below

Current ratio = Total Current assets ÷ total current liabilities

where,

Total current assets = Cash + short-term investments + net accounts receivable + merchandise inventory

= $43,500 + $27,000 + $102,000 + $125,000

= $297,500

And, the total current liabilities is $251,000

Now put these values to the above formula

So, the ratio would equal to

= $297,500 ÷ $251,000

= 1.18 times

The long term note payable is not a current liabilities,hence it is not considered in the computation part.