Final answer:
The current ratio for Wilberton's is calculated by subtracting net fixed assets from total assets to find current assets, then subtracting long-term debt from total debt to find current liabilities.
Dividing current assets by current liabilities yields a current ratio of 1.93, indicating that the company has $1.93 in current assets for every $1 of current liabilities.
Step-by-step explanation:
The current ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations or those due within one year. To calculate the current ratio, we use the formula:
Current Ratio = Current Assets / Current Liabilities
First, we need to find the current assets. Current assets are total assets minus net fixed assets. So, we subtract the net fixed assets from the total assets:
Current Assets = Total Assets - Net Fixed Assets
Current Assets = $537,800 - $412,400
Current Assets = $125,400
Now, we calculate current liabilities by subtracting long-term debt from total debt:
Current Liabilities = Total Debt - Long-term Debt
Current Liabilities = $388,700 - $323,900
Current Liabilities = $64,800
Finally, we can calculate the current ratio:
Current Ratio = $125,400 / $64,800
Current Ratio = 1.93
The current ratio for Wilberton’s is 1.93, which indicates that the company has $1.93 in current assets for every $1 in current liabilities.