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Using the following balance sheet and income statement data, what is the current ratio?Current assets $9,000 Net income $12,000Current liabilities 4,000 Stockholders’equity 24,000Total assets 30,000 Total liabilities 6,000Average common shares outstanding was 10,000
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Current Ratio calculates how many dollars in assets are likely to be converted to cash within a year in order to pay off debts. The ratio of current assets to current liabilities is known as the current assets to current liabilities ratio. Current Ratio = 9000/4000 = 2.25
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