Question

As of December 31, 2020, CleteCorp has the following selected financial data: net sales 1,450,000, net income 200,000, current assets 600,000, total assets 3,000,000, non-current liabilities 1,500,000, total liabilities 2,000,000. Calculate the current ratio.

1) 1.2
2) insufficient information to answer the question
3) 0.4
4) 1.5

Answer 1

The current ratio of CleteCorp is 1.2.

Step-by-step explanation:

The current ratio is calculated by dividing current assets by current liabilities.

In this case, the current assets of CleteCorp are $600,000, and the current liabilities are not given directly. However, we can calculate the current liabilities by subtracting the non-current liabilities from the total liabilities. So, the current liabilities would be $2,000,000 - $1,500,000 = $500,000.

The current ratio is then calculated as: $600,000 / $500,000 = 1.2.

Therefore, the correct answer is 1) 1.2.