Question

Analysis of a company's financial statements: Below are simplified versions of the balance sheet and income statement for Toys by Tom, Inc. Use this information to answer the following question. Toys by Tom, Inc. has a current ratio of ____, suggesting ________.

Answer 1

This is an incomplete question. The balance sheet information is missing.

Step-by-step explanation:

Current ratio = Current assets / Current Liabilities

= 4.0 / 7.0

= 0.57

Thus Toys by Tom Inc. have a current ratio of 0.57 suggesting potential liquidity.

Liquidity may be defined as how hard or easy it is to exchange an asset at an identifiable market price.

Hence the answer is = 0.57 suggesting potential liquidity.