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1 August, 12:58

Discount Travel has the following current assets: cash, $102 million; receivables, $94 million; inventory, $182 million; and other current assets, $18 million. Discount Travel also has the following liabilities: accounts payable, $98 million; current portion of long-term debt, $35 million; and long-term debt, $23 million. Based on these amounts, what is the current ratio?

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  1. 1 August, 13:00
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    The current ratio is 2.98

    Explanation:

    total current assets = cash + receivables + inventory + other current assets

    = $102 million + 94 million + 182 million + 18 million

    = $396 million

    total current liabilities = accounts payable + current portion of long term debt

    = $98 million + $35 million

    = $133 million

    current ratio = current assets/current liabilities

    = [$396 million]/[$133 million]

    = 2.98

    Therefore, The current ratio is 2.98
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