Question

Bathez Corp. has receivables of $54,545, inventory of $593,166, cash of $29,635, and accounts payables of $536,282. What is the firm's current ratio? Round your final answer to two decimal places. Do not type the \% symbol.

Answer 1

To calculate Bathez Corp.'s current ratio, you add the current assets (receivables, inventory, and cash) and divide by the current liabilities (accounts payable). The final current ratio is approximately 1.26, indicating the liquidity position of the company.

Step-by-step explanation:

The question asks for the current ratio of Bathez Corp. This is a common financial metric used to gauge a company's liquidity by comparing its current assets to its current liabilities. To compute the current ratio, you add the value of receivables, inventory, and cash to get total current assets and divide by the accounts payable to find current liabilities. The formula for the current ratio is:

Current Ratio = (Current Assets) / (Current Liabilities)

Using the values provided:

• Receivables = $54,545

• Inventory = $593,166

• Cash = $29,635

• Accounts Payable = $536,282

The sum of receivables, inventory, and cash gives us $677,346. Therefore, the current ratio calculation is:

Current Ratio = $677,346 / $536,282

After solving the equation, the current ratio is approximately 1.26 when rounded to two decimal places.