Harrisonburg Company had current and total assets of $470,000 and $1,000,000, respectively. The company's current and total liabilities were $267,000 and $600,000, respectively. Calculate the amount of working capital and the current ratio using this information. (Round your current ratio answer to 2 decimal places.)

Question

Natalia Chen

Business

16 January, 23:15

Harrisonburg Company had current and total assets of $470,000 and $1,000,000, respectively. The company's current and total liabilities were $267,000 and $600,000, respectively. Calculate the amount of working capital and the current ratio using this information. (Round your current ratio answer to 2 decimal places.)

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Answers (1)

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Karter Wade · Answer 1

Working Capital = $203,000

Current ratio = 1.7603

Explanation:

Working capital is the liquid assets that are available to a business for the day-to-day operations. It is calculated by getting the difference between current assets and current liability.

Current asset = $470,000

Current liabilities = $267,000

Working capital = Current Assets - Current Liabilities

Working Capital = 470,000-267,000

Working Capital = $203,000

Current ratio is a liquidity ratio that measures a business's ability to pay it's short term liabilities.

Current ratio = Current Assets / Current Liabilities

Current ratio = 470,000 / 267,000

Current ratio = 1.7603