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14 October, 09:06

Kramer Industries has cash of $39,000; net Accounts Receivable of $45,000; shortminusterm investments of $12,000 and inventory of $31,000. It also has $30,000 in current liabilities and $57,000 in longminusterm liabilities. What is the current ratio for Kramer Industries?

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  1. 14 October, 09:26
    0
    4.23

    Explanation:

    Current ratio is a financial measure that shows how many times the company's current assets can be used to meet its current obligations or liabilities.

    It is a liquidity ratio and is given as

    Current ratio = Current assets / current liabilities

    Current assets = $39,000 + $45,000 + $12,000 + $31,000

    = $127,000

    Hence, the current ratio for Kramer Industries

    = $127,000/$30,000

    = 4.23
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