Current Attempt in Progress Ayayai Corp. has current assets of $1850000 and current liabilities of $640000. If they pay $339000 of their accounts payable, what will their new current ratio be? 6.1:1 0.7:1 O 2.9:1

Current Attempt in Progress Ayayai Corp. has current assets of $1850000 and current liabilities of $640000. If they pay $339000 of their accounts payable, what will their new current ratio be? 6.1:1 0.7:1 O 2.9:1

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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Question

Current Attempt in Progress
Ayayai Corp. has current assets of $1850000 and current liabilities of $640000. If they pay $339000 of their accounts payable, what
will their new current ratio be?
6.1:1
O 0.7:1
O 2.9:1
O 5.0:1
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Expert Solution

Step 1

The current ratio is one of the liquidity ratios that tell how efficiently a company meets its short-term obligations using its current assets. A current ratio of 2:1 is considered to be ideal because it implies that the current assets of an organization are twice its current liabilities.

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