Question

Long-term assets are $800, current liabilities are $500, and long-term liabilities are $600. if the current ratio is 2.5 to 1, then current assets are

Answer 1

we are given with the current liabilities and the current ratio that is 2.5. Current ratio is equal to current assets over current liabilities. In this case, the current assets is then equal to $500*2.5 equal to $1250. Current ratio is an index that measures the ability of current assets to cover the current and long term liabilities.