Question

Brenda’s bar and grill has current liabilities of $19 million. cash makes up 15 percent of the current assets and accounts receivable makes up another 30 percent of current assets. brenda’s current ratio is 2.0 times.

Answer 1

The current ratio measures a company's ability to pay off its short-term liabilities. Brenda's bar and grill has a current ratio of 2.0 times. By calculating the amounts of cash and accounts receivable, we can determine Brenda's current assets.

Step-by-step explanation:

A current ratio is a financial ratio that measures a company's ability to pay off its short-term liabilities with its short-term assets. It is calculated by dividing the company's current assets by its current liabilities. In this case, Brenda's bar and grill has a current ratio of 2.0 times.

To calculate Brenda's current assets, we need to determine the amount of cash and accounts receivable. Since cash makes up 15% of the current assets, we can multiply the total current assets by 0.15 to find the cash amount. Similarly, accounts receivable make up 30% of the current assets, so we can multiply the total current assets by 0.30 to find the accounts receivable amount.

Once we have the cash and accounts receivable amounts, we can calculate the current assets by adding them together. Finally, we can calculate Brenda's total current liabilities by using the given value of $19 million. With the current assets and liabilities, we can calculate the current ratio by dividing current assets by current liabilities.