Answer:
The firm's current ratio for the year is approximately 3.85.
Step-by-step explanation:
The current ratio is a measure of a company's short-term liquidity and indicates its ability to meet its current obligations using its current assets. A ratio above 1 suggests that the company has sufficient current assets to cover its current liabilities, while a ratio below 1 indicates potential difficulties in meeting short-term obligations. In this case, the current ratio of 3.85 indicates that the Mayflower Moving Company is in a strong position to meet its current liabilities.
To calculate the current ratio, we need to divide the current assets by the current liabilities.
In this case, the Mayflower Moving Company has current assets of $104,000 and current liabilities of $27,000.
Current ratio = Current Assets / Current Liabilities
Current ratio = $104,000 / $27,000
Dividing $104,000 by $27,000 gives us a current ratio of approximately 3.85.
Therefore, the firm's current ratio for the year is approximately 3.85.