14.5k views
0 votes
Southport industries company has current assests of $610000 and a current ratio is 4.1. Assume that the company prepays rent for 9 months in the amount of $34,000. The current ratio after this transaction is closest to:_____.

A) 5.03.
B) 3.90.
C) 3.68.
D) 4.12.

User Mvandillen
by
8.2k points

1 Answer

5 votes

Answer: D. 4.12

Step-by-step explanation:

From the question, we are informed that Southport industries company has current assests of $610000 and a current ratio is 4.1 and that the company prepays rent for 9 months in the amount of $34,000.

It should be noted that the current ratio is calculated as:

= Current assets/Current liabilities

4.1 = $610,000/current liabilities

Current liabilities = $610,000/4.1

= $148,781

The current ratio will still be close.to 4.1 based on the above analysis.

User Frankely Diaz
by
8.3k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.