Compute current ratio PILCneu CO. Teporteu uie Toliowing year-enIu Udld.CashShort-term investmentsAccounts receivable (current)InventoryOther current assetsTotal current liabilities$15,400$ 5,300$10,500$28,000$ 8,000$24,000

Answered: Compute current ratio

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Compute current ratio

PILCneu CO. Teporteu uie Toliowing year-enIu Udld.
Cash
Short-term investments
Accounts receivable (current)
Inventory
Other current assets
Total current liabilities
$15,400
$ 5,300
$10,500
$28,000
$ 8,000
$24,000

Expert Solution

Step 1 - Introduction:

The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities.The current ratio is an important measure of liquidity because short-term liabilities are due within the next year.

The formula for calculating current ratio is:

Current Ratio=Current asset/Current Liability

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