Question

Buckley has the following assets and liabilities: 3,000 in a savings account,45,000 in stocks, 2,000 in credit card bills, and a car loan of33,000. Given this information, what is Buckley's current ratio?

1) 0.67
2) 0.73
3) 1.37
4) 1.50

Answer 1

To calculate Buckley's current ratio, sum the total current assets and divide it by the total current liabilities.The correct option is 3.

Step-by-step explanation:

In order to calculate Buckley's current ratio, we need to determine the total current assets and total current liabilities. Current assets are assets that can be easily converted into cash within a year, while current liabilities are debts that are due within a year. The formula for the current ratio is:

Current Ratio = Total Current Assets / Total Current Liabilities

In this case, Buckley's total current assets are 3,000 (savings account) + 45,000 (stocks) = 48,000, and the total current liabilities are 2,000 (credit card bills) + 33,000 (car loan) = 35,000. Therefore, Buckley's current ratio is:

Current Ratio = 48,000 / 35,000 ≈ 1.37

So the correct answer is 3) 1.37.