Asked by Eribel Almonte on May 07, 2024
Verified
If a company has current assets of $15,000 and current liabilities of $9,500,its current ratio is 1.6
Current Assets
Assets that are expected to be converted into cash, sold, or used within a year, including cash, inventory, and receivables.
Current Liabilities
Short-term financial obligations that are due within one year or within the normal operating cycle of a business, whichever is longer.
Current Ratio
A liquidity ratio that measures a company's ability to pay short-term obligations by comparing current assets to current liabilities.
- Gain an understanding of the current ratio and its role in determining a company’s financial fluidity.
Verified Answer
SS
Sailesh SharmaMay 09, 2024
Final Answer :
True
Explanation :
The current ratio is calculated by dividing current assets by current liabilities. Therefore, Current Ratio = Current Assets / Current Liabilities = $15,000 / $9,500 = 1.6. So, the statement is true.
Learning Objectives
- Gain an understanding of the current ratio and its role in determining a company’s financial fluidity.