Question

The current ratio of a firm with current assets of $300,000, current liabilities of $100,000, and inventory of $100,000 is:

Answer 1

Answer: 3.0

Step-by-step explanation:

The current ratio of a firm allows us to tell whether the company is able to pay off its current obligations using its current assets.

Current ratio is calculated by:

= Current assets / Current liabilities

= 300,000 / 100,000

= 3.0

Inventory is already included in current assets so there is no need to add it again.