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Nelson Ltd reported a total asset of $600,000, and a net profit of $90,000, while their current liabilities stood at $320,000 for 2021 financial period. If current assets are 40% of the total assets, what is the current ratio for Nelson Ltd?     0.75     1.88     0.53     1.33

Nelson Ltd reported a total asset of $600,000, and a net profit of $90,000, while their current liabilities stood at $320,000 for 2021 financial period. If current assets are 40% of the total assets, what is the current ratio for Nelson Ltd?     0.75     1.88     0.53     1.33

FINANCIAL ACCOUNTING
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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Nelson Ltd reported a total asset of $600,000, and a net profit of $90,000, while their current liabilities stood at $320,000 for 2021 financial period. If current assets are 40% of the total assets, what is the current ratio for Nelson Ltd?

   

0.75
   

1.88
   

0.53
   

1.33
Expert Solution
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The current ratio and acid test ratio both are part of liquidity ratios. These ratios measure the efficiency of the firm having a sufficient amount of cash to pay out its current liabilities.

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