Question

Cash 30,000 Accounts receivable 65,000 Inventory 72,000 Marketable securities 36,000 Prepaid expenses 2,000 Intangible assets 40,000 Property, plant, and equipment 625,000 Long-term investments 110,000 Accounts payable $ 40,000 Accrued liabilities 7,000 Notes payable (short-term) 30,000 Long-term liabilities 75,000 Based on the data for Harding Company, what is the current ratio, rounded to one decimal point?

Answer 1

2.7 times

Step-by-step explanation:

The computation of the current ratio is shown below:

Current ratio = Current assets ÷ Current liabilities

where,

Current assets = Cash + account receivable + inventory + marketable securities + prepaid expense

= $30,000 + $65,000 + $72,000 + $36,000 + $2,000

= $205,000

And, the current liabilities is

- Account payable + accrued liabilities + short term note payable

= $40,000 + $7,000 + $30,000

= $77,000

So, the current ratio is

= $205,000 ÷ $77,000

= 2.7 times