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12 October, 18:53

You are evaluating the balance sheet for PattyCake's Corporation. From the balance sheet you find the following balances:

cash and marketable securities = $360,000;

accounts receivable = $1,280,000;

inventory = $2,180,000;

accrued wages and taxes = $540,000;

accounts payable = $840,000; and

notes payable = $680,000.

Calculate Current Ratio?

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  1. 12 October, 19:05
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    Current Assets are those asset which will be liquidated within next one year.

    cash and marketable securities $360,000

    accounts receivable $1,280,000

    inventory $2,180,000

    Total Current Assets $3,820,000

    Current Liabilities are those which is payable within next one year.

    accrued wages and taxes $540,000

    accounts payable $840,000

    notes payable $680,000

    Total Current Liabilities $2,060,000

    Current ratio measures the capability of a business to pay the current liabilities if it becomes due.

    Current Ratio = Current Assets / Current Liabilities = $3,820,000 / $2,060,000 = 1.85 times
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