What is the Current Ratio given the following information?

Current Assets = $477.50

Inventory = $275

Current Liabilities = $1075

Question 6 options:

0.70

0.45 incorrect

0.33

0.60

0.70

Explanation:

I just took this test and 0.45 was wrong. It's 0.70

The correct option is B that is 0.45

Explanation:

Computing the Current Ratio with the formula which is as:

Current Ratio (CR) = Current Assets (CA) / Current Liabilities (CL)

where

Current Ratio (CA) is $477.50

Current Liabilities (CL) is $1075

Putting the values in the above formula of Current Ratio (CR):

= $477.50 / $1075

= 0.444 or 0.45

Note 1: Inventory will not be included while computing the current ratio, as it is already been added in the current assets. Therefore, there is no need of adding it twice in the Assets.

Note 2: This is the correct formula for computing the current ratio and I computed the same with the given information, so it 0.45 is the correct answer.