Question

Bramble Corp. has current assets of $1490000 and current liabilities of $820000. If they issue $175000 of new stock what will their new current ratio be?

Answer 1

New Current ratio will be 1.82

Step-by-step explanation:

Current assets = $1,490,000

Current liabilities = $820,000

New stock issued = $175000

Current Ratio = Current Assets / Current Liabilities

Current Ratio = $1,490,000 / $820,000

Current Ratio = 1.8171 = 1.82

New Stock issue will not effect the current ratio as current ratio only deals the current assets and current liabilities ( as given in formula above ). Any equity transaction will not effect this ratio.