### 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

Problem 1Q

See similar textbooks

Related questions

Q: Total Total Owner's Debt-to- Debt-to- Company Assets Liabilities Equity Assets Ratio Equity Ratio an…

A: Total assets= $242,430 Total liabilities= $114,320

Q: A company has total equity of $2,085, net working capital of $215, long-term debt of $1,020, and…

A: Net Fixed Assets - It is the value of fixed assets derived after deducting accumulated depreciation…

Q: AXA insurance company has an loss adjustment expense of 3,718, underwriting expense of 786, premiums…

A: Premium refers to the amount of money the insured pays for the insurance coverage. Loss adjustment…

Q: Some selected financial statement items belonging to MNO Company are given in the table below.…

A: Return on equity It is considered to be one of the financial performance measures and it is a…

Q: Accounting A company has total assets of $500,000, total liabilities of $200,000, and total equity…

A: The objective of the question is to calculate the company's debt-to-equity ratio. The debt-to-equity…

Q: Using these data from the comparative balance sheets of Cullumber Company, perform vertical…

A: VERTICAL ANALYSIS OF BALANCE SHEET Vertical analysis is a proportional analysis of financial…

Q: AXA insurance company has an loss adjustment expense of 3,147, underwriting expense of 947, premiums…

A: Here,

Q: Rosewood Company had current assets of $612, current liabilities of $393, total assets of $722, and…

A: Debt ratio: It implies to the ability of the business in repaying its liabilities or debt…

Q: Prepare a vertical analysis of the balance sheets for Year 4 and Year 3. (Percentages may not add…

A: The vertical analysis compares the results of two different years. The income statement is analyzed…

Q: Compute Return on assets ratio if Net Income:2.026 ; Sales:17.193 ;Total Assets: 31.483 ; Total…

A: Return on Assets is the financial ratio that shows the profitability of the company with respect to…

Q: Calculate the financial indicators of the firms J&J for the year 2018 and fill in the spaces marked…

A: Accounting ratios are used to make analyses regarding the performance and efficiency of business…

Q: Accounting SBJ, Inc., has net working capital of $2,160, current liabilities of $5,450, and…

A: When evaluating whether to approve a firm for short-term loan, creditors consider the current ratio.…

Q: Two income statements for Satterfield Company are shown below. Satterfield Company Income…

A: The comparison in different year financial statement can be made on the basis of increase or…

Q: Knowledge Check Data from the comparative balance sheets of Wise Company are presented here. Perform…

A: For vertical analysis, each element of the financial statement is compared on the basis of the base…

Q: Determining the effects of business transactions on selected ratios Financial statement data of…

A: Hey, since there are multiple sub-parts posted, we will answer the three sub-parts. If you want any…

Q: FIN ANCIAL RATIO S Based on the financial statements for Jackson Enterprises (income statement,…

A: Since we answer only three subparts, we will answer the first three. Please resubmit the question…

Q: Calculate the current ratio for each of the following companies (round the ratio to two decimals).…

A: Current ratio: Current ratio is one of the liquidity ratios, which measures the capacity of the…

Q: 1. A company has Currents Assets of 175,000 and Current Liabilities of 120,000. Calculate the…

A: Current ratio is computed by dividing the current assets with the current liabilities. Current ratio…

Q: reported finanical information: Assets $45,800 Liabilities 17,220 common…

A: Accounting equation: Assets = Liabilities + share holders equity. According to double entry concept…

Q: An insurance company has a combined ratio of 1.68, overall operating ratio of 1.3 and an expense…

A: Combined ratio is defined as a measure which determines the extent of amount or cash outflow of the…

Q: Belnap Company has provided the following partial comparative balance sheets and the income…

A: Definition: Statement of cash flows: This statement reports all the cash transactions which are…

Q: An insurance company has a combined ratio of 1.02, overall operating ratio of 1.42 and an expense…

A: Combined Ratio = 1.02 Operating Ratio = 1.42 Expense Ratio = 0.37 Loss Ratio = ?

Q: The 2024 income statement of Adrian Express reports sales of $20,310,000, cost of goods sold of…

A: The ratio is used to evaluate the firm's financial situation and helps management in making…

Q: An insurance company has a combined ratio of 1.63, overall operating ratio of 1.04 and an expense…

A: Combined ratio of 1.63 Overall operating ratio of 1.04 To Find: Investment Income ratio

Q: Revenues RUNDLE COMPANY Horizontal Analysis of Income Statements Year 4 Year 3 Sales (net) Other…

A: The horizontal analysis is compared to change in amount of different financial periods. It is…

Q: What does a current ratio of 2,4 mean? a) The company has 2,4 lira of equity for every lira of…

A: The current ratio is an important ratio which analyzes the liquidity of the firm.

Q: Enuma tish of Babylon, inc has inventory of $1,200, cash of $390, net fend assets of $2,180,…

A: The common size statement analyses financial statements by taking into consideration each of the…

Q: The classified balance sheet for company reporte current assets o $1,688,830, tota abilities of…

A: Current ratio = Current assets/current liabilities

Q: ASSETS EQUITIES P 500,000 1,500,000 Current assets Current liabilities P 200,000 Long-term…

A: Return on Current Assets = 7% Return on Fixed Assets = 16% Cost of Current liabilities = 2% Cost of…

Q: The following information was drawn from the balance sheets of two companies: Company East West…

A: The debt to asset ratio can be defined as the measurement of the amount of total assets that are…

Q: omplete Computer Services reports Total Assets of $1,000, Total Liabilities of $200, and Total…

A: The ratio analysis is performed to compare the different elements of the business. The debt ratio is…

Q: Prepare a horizontal analysis of both the balance sheet and income statement. Complete this question…

A: HORIZONTAL ANALYSIS OF BALNCE SHEET Horizontal analysis is used to review of a Companies…

Q: Company ZYX has the following financial information: Current Assets: $500,000 Current Liabilities:…

A: The current ratio is used to estimate a company's short-term liquidity position. It shows the…

Q: find one financial report for a company listed in bursa malaysia and find CURRENT RATIO,QUICK RATIO…

A: Introduction:The UMW Group is a leading industrial conglomerate and ranks among the foremost…

Q: If a company has current assets of $15,000 and current liabilities of $9,375, its current ratio is…

A: Current ratio is the ratio between total current assets and total current liabilities. It is…

Q: A company has the following information: total assets $500,000, total liabilities $200,000, and…

A: To calculate the debt ratio and equity ratio, we need to use the following formulas: Debt Ratio =…

Q: Required Prepare a vertical analysis of both the balance sheets and income statements for Year 4 and…

A: The vertical analysis is performed to compare the element of balance sheet with respect to total…

Q: 1) The Ivy Corporation shows the following data: Current assets:…

A: Current Ratio: It is the measuring tool that is used to measure company's liquidity. It establishes…

Q: Prepare a horizontal analysis of both the balance sheet and income statement. Complete this question…

A: Increase/(decrease) = Year 4 amount - Year 3 amount % change = Increase (decrease)/Year 3 amount

Q: What is the percentage of Total Liabilities in Total Assets if a firm has 2, 233, 000 in…

A: ACCOUNTING EQUATIONAccounting Equation is a Financial Accounting Technique which represents the…

Q: Calculate the following ratios, follow the steps and must interpret your answers , Current ratio…

A: 1) Current Ratio = Current Assets / Current Liabilities

Q: EX.17-179.ALGO The following information was from Slater Company's balance sheet: Fixed assets (net)…

A: Ratio of fixed assets to long-term liabilities = Fixed assets/Long term liabilitiesRatio of…

Q: assets consisted of $63,800 Cash; $45,700 Accounts Receivable; and $74,500 of Inventory. The…

A: Acid Test ratio = Quick Assets/ Current liabilities Acid test ratio = $ 109,500/ $ 127,500 Acid test…

Q: Formulating Financial Statements from Raw Data and Calculating Ratios Following is selected…

A: Since you have posted a question with multiple sub-parts, we will do the first three sub-parts for…

Q: The following financial information is taken from the balance sheets of the Peter Company and the…

A: The current ratio is a common business approach for evaluating a company's short-term liquidity in…

Q: Compute the missing amounts on the company’s financial statements. (Hint: What’s the difference…

A: Retained Earnings - Retained earnings are the total amount of a company's profits that are set aside…

Question

100%

### 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.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2 - Calculation of company's current ratio.

VIEW

Step 3 - Answer

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

stark company most recent balance sheet reported total assets of 2.02 million and total liabilitie of 0.74 million and total equity of 1.28 million its debit equity to ratio is A. 0.37 B. 0.63 C. 1.73 D. 0.58 E. 1.00
Use the selected balance sheet and income statement information below for Anka Inc. to compute the current ratio. Explain what information this ratio provides. Current Assets $26,300,450 Current Liabilities $14,879,200 Pretax Income $4,300,600 Interest Expense $1,300,000
A company had total assets of $39,946 and total liabilities of $30,624. Calculate its debt ratio. Be sure to show work
Assume a company has working capital equal to $23,000 and total current liabilities equal to $75,000. The current ratio: is 0.31. Ois 1.31. Ois 3.21. cannot be determined using this information.
Please analyze company Savola using below table of common size balance sheet compared to other companies:
Required Prepare a vertical analysis of both the balance sheets and income statements for Year 4 and Year 3. Complete this question by entering your answers in the tabs below. Analysis Bal Sheet Analysis Inc Stmt Prepare a vertical analysis of an income statements for Year 4 and Year 3. (Percentages may not add exactly due to rounding. Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).) ALLENDALE COMPANY Vertical Analysis of Income Statements Year 4 Year 3 Amount % Total Amount % Total Revenues Sales (net) $ 230,000 100.00 % $ 210,000 100.00 % Other revenues 8,000 5,000 Total revenues 238,000 215,000 Expenses Cost of goods sold 120,000 103,000 Selling, general, and administrative expense 55,000 50,000 Interest expense 8,000 7,200 Income tax expense 23,000 22,000 Total expenses 206,000 182,200 Net income $ 32,000 % $ 32,800 %
Compute the following for Stanley Limited. Round your answers to two decimal places. All answers MUST be expressed in the unit as specified in the question, if any. Show your workings. (a) Gross Profit Rate (in %) (b) Current Ratio (c) Quick Ratio B Stanley Limited Statement of Financial Position 31 December 2021 ($ in million) Stanley Limited Income Statement For the year ended 31 December 2021 ($ in million) Question B5 (continued) (d) Accounts Receivable Turnover Rate (e) Return on Equity (%) (f) Debt Ratio (in %) (g) Price-Earnings Ratio
plagiarism report The financial statement of Z Ltd shows that the company has current liabilities of $120,000, total liabilities of $250,000 and the amount of working capital of the Z Company is $50,000. Determine the liquidity position of Z Company using the current ratio?
From the following data relating to assets of Balance sheet of Max Ltd for the period ended 31st March, 20 to 31st March, 22. Calculate Trend percentage & interpret on it. Particulars 31st Mar,20 31st Mar,21 31st Mar,22 Debtors 20 30 20 Cash 30 20 15 Stock 60 80 70 Investment 80 80 90 Machine 100 200 100 Building 150 250 250 Furniture 200 300 500
Subject: acounting
The following information was taken from Celebrate Company's balance sheet: Fixed assets (net) $506,000 Long-term liabilities 230,000 Total liabilities 483,000 Total stockholders' equity 805,000 Determine the company's (a) ratio of fixed assets to long-term liabilities and (b) ratio of liabilities to stockholders' equity. If required, round your answers to one decimal place. a. Ratio of fixed assets to long-term liabilities fill in the blank 1 b. Ratio of liabilities to stockholders' equity
You are required to calculate:1. Liquidity ratios 2. Solvency rations 3. Profitability ratios For the selected companies and shortly write your comments and findings.