### Understanding Current RatioA company's classified balance sheet shows current assets of $8,650 and current liabilities of $6,000. What is the company's current ratio?#### Multiple Choice Options:- 3.26 to 1- 1.44 to 1- 0.69 to 1- 1.16 to 1### Explanation:The **current ratio** is a measure of a company's ability to cover its short-term obligations with its short-term assets. It is calculated by dividing the current assets by the current liabilities. Here's how you calculate it based on the given data:- **Current Assets** = $8,650- **Current Liabilities** = $6,000**Current Ratio** = Current Assets / Current Liabilities **Current Ratio** = $8,650 / $6,000 Now, calculate and round to two decimal places to find the most accurate choice from the given options.

The current ratio is a type of liquidity ratio that measures the company's ability to settle the…

Answered: A company's classified balance sheet…

A company's classified balance sheet shows current assets of $8,650 and current liabilities of $6,000. What is the company's current ratio? Multiple Choice 3.26 to 1 1.44 to 1 0.69 to 1 1.16 to 1

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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### Understanding Current Ratio

A company's classified balance sheet shows current assets of $8,650 and current liabilities of $6,000. What is the company's current ratio?

#### Multiple Choice Options:

- 3.26 to 1
- 1.44 to 1
- 0.69 to 1
- 1.16 to 1

### Explanation:

The **current ratio** is a measure of a company's ability to cover its short-term obligations with its short-term assets. It is calculated by dividing the current assets by the current liabilities. Here's how you calculate it based on the given data:

- **Current Assets** = $8,650
- **Current Liabilities** = $6,000

**Current Ratio** = Current Assets / Current Liabilities
**Current Ratio** = $8,650 / $6,000

Now, calculate and round to two decimal places to find the most accurate choice from the given options.

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