Question

Use the following data to calculate the current ratio. Wildhorse Co. Balance Sheet December 31, 2022 Cash $187000 Accounts payable $208000 Accounts receivable 150000 Salaries and wages payable 26500 Inventory 152000 Mortgage payable 226500 Prepaid insurance 88400 Total liabilities $461000 Stock investments (long-term) 273000 Land 269000 Buildings $314000 Common stock $390900 Less: Accumulated depreciation (60000) 254000 Retained earnings 731500 Goodwill 210000 Total stockholders' equity $1122400 Total assets $1583400 Total liabilities and stockholders' equity $1583400

Answer 1

Answer: 2.46: 1

Step-by-step explanation:

The Current ratio is used to determine if the current assets of a business can be used to pay off its current liabilities.

Current Ratio = Current assets / Current Liabilities

Current Assets = Cash + Accounts receivable + Inventory + Prepaid insurance

= 187,000 + 150,000 + 152,000 + 88,400

= $‭577,400‬

Current Liabilities = Accounts payable + Salaries and wages payable

= 208,000 + 26,500

= $‭234,500‬

Current ratio

= 577,400/234,500

= 2.46