HHD's current assets are $26000, net income is $140,000, long-term debt is $1,755,000, and 35% of the firm's assets are financed with common equity. The firm's return on assets is 4%. Calculate the current ratio as follows: Current ratio is one of the liquidity ratios which is used to measure the short-term ability of the firm to pay the firm's short-term obligations with its current assets. Current ratio = Current assets Current liabilities Return on assets is used to measure how profitable the firm is related to the firm's total assets. Return on assets = Net income Total assets

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Chapter 2, Problem 17PROB

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HHD's current assets are $26000, net income is $140,000, long-term debt is $1,755,000, and 35% of the firm's assets are financed with common equity. The firm's return on assets is 4%.

Calculate the current ratio as follows:

Current ratio is one of the liquidity ratios which is used to measure the short-term ability of the firm to pay the firm's short-term obligations with its current assets.

Current ratio=Current assetsCurrent liabilities

Return on assets is used to measure how profitable the firm is related to the firm's total assets.

Return on assets=Net incomeTotal assets

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