Question

As of Dec. 31, 2013, a company had current assets of $600,000 and current liabilities of $300,000. Sales of the company are expected to increase by 10 percent for each of the next two years. If all current assets and current liability accounts increase proportionately with sales, what would be the projected current ratio of the company on Dec. 31, 2015

Answer 1

2.00

Step-by-step explanation:

Calculation to determine what would be the projected current ratio of the company on Dec. 31, 2015

Using this formula

Current ratio =Current assets/ Current liabilities

Let plug in the formula

Current ratio =$600,000 /$300,000

Current ratio =2.00

Therefore the projected current ratio of the company on Dec. 31, 2015 is 2.00