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3 December, 04:53

At the end of the recent year, The Gap, Inc., reported total assets of $7,610 million, current assets of $4,315 million, total liabilities of $4,706, current liabilities of $2,453 million, and stockholders' equity of $2,904 million. What is its current ratio and what does this suggest about the company?

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  1. 3 December, 05:03
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    The formula to compute the current ratio is shown below:

    Current ratio = Total Current assets : total current liabilities

    where,

    Total current assets = $4,315 million

    And, the total current liabilities is $2,453 million

    So, the current ratio is

    = $4,315 million : $2,453 million

    = 1.76 times

    Since the current ratio is greater than the 1.76 times that reflects that company have a liquidity position and it is able to pay its short term obligations
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