Question

What is the Current Ratio given the following information?

Current Assets = $750


Inventory = $275


Current Liabilities = $1075


Question 7 options:


0.81



0.70 incorrect



0.95



0.65

Answer 1

0.95

Step-by-step explanation:

The current ratio is a liquidity ratio that measures a business's ability to meet its short-term obligation. It indicates a company's financial strength by evaluating its ability to meet current assets using current liabilities.

The formula for calculating the current ratio is current assets/ current liabilities.

In this case: Current assets +inventory

$750 + $275= $ 1,025

Liabilities : $ 1075

Current ratio: $1,025/$1,075

=0.95