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26 January, 18:06

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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  1. 26 January, 18:33
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    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
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