Compute current ratio

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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
Transcribed Image Text: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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