Question

Company Balance Sheet as of December 31, 2014 Assets Liabilities Current Assets Current Liabilities Cash $ 42.000 Accounts payable..... .........$ 30,000 Inventory..... ............. 36,000 Short-term debt.. ....... 42.000 Prepaid expense......................... 12.000 Total current liabilities......... $72.000 Total current assets.. ... $ 90,000 Non-current Liabilities Non-current Assets Bond payable..... 34.000 Plant and equipment (net)........... 58.000 Owners' Equity Patent (net). 24.000 Common stock. - 20,000 Total Assets ............. $ 170.000 Retained earnings 44,000 Total Liabilities and Owners' Equity ..........$ 170,000

Quentin's current ratio on December 31, 2014, is _______.
a. 2.12
b. 1.52
c. 1.19
d. 0.53

Answer 1

d. 0.53

Step-by-step explanation:

Current ratio is defined as a liquidity ratio, which helps to know if a company is able to meet up with its short term financial obligations.

Current ratio = Total current asset / Total asset

Given that;

Total current asset = $90,000

Total assets = $170,000

Quentin's current ratio = $90,000 / $170,000

= 0.529

= 0.53 approx.