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18 August, 11:24

Assume cash = $120, inventory = $470, accounts payable = $811, accounts receivable = $510, and total assets = $21,400. What is the current ratio?

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  1. 18 August, 13:25
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    1.36 times

    Explanation:

    The computation of the current ratio is shown below:

    Current ratio = Total Current assets : total current liabilities

    where,

    Total current assets = Cash + inventory + account receivable

    = $120 + $470 + $510

    = $1,100

    And the total current liabilities equal to account payable i. e $811

    So, the current ratio would be

    = $1,100 : $811

    = 1.36 times
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