Question

Sanchez Corporation Selected Financial Information 12/31/18 12/31/17 Cash$20,000 $25,000 Accounts receivable (net) 100,000 110,000 Inventories 190,000 155,000 Total current assets 310,000 290,000 Long-term assets 230,000 210,000 Current liabilities 200,000 190,000 Long-term liabilities 40,000 50,000 Shareholders' equity 300,000 260,000 Net income$40,000 Interest expense 10,000 Income tax expense 20,000 The current ratio for 2018 is:

Answer 1

Answer:

The current ration for 2018 will be "1.55".

Explanation:

The given values are:

The total current assets of 2018 is:

= $310,000

The total current liabilities of 2018 is:

= $200,000

Now,

The current ratio of 2018 will be:

= $\frac{The total \ current \ assets \ of \ 2018}{The \ total \ current \ liabilities \ of \ 2018}$

On substituting the estimated values in the above formula, we get

= $\frac{310,000}{200,000}$

= $1.55$