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ZFIE 3 Practice - Not Graded Saved Accounts receivable Accounts payable Buildings Cash $28,000 Long-term notes payable 18,300 office supplies 48,000 Prepaid insurance 7,800 Unearned services revenue $26,000 4,800 5,080 2,700 Compute Chavez Company's current ratio using the above information
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ZFIE 3 Practice - Not Graded Saved Accounts receivable Accounts payable Buildings Cash $28,000 Long-term notes payable 18,300 office supplies 48,000 Prepaid insurance 7,800 Unearned services revenue $26,000 4,800 5,080 2,700 Compute Chavez Company's current ratio using the above information. Choose Numerator: Current assets 17,6842 Current Ratio Choose Denominator: 1 Current liabilities $ 2,700 Current Ratio Current ratio = 6.55 Ces
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If you were making a product to sell, why would you want to know what activities are driving your overhead costs? Give a short example.
Expert Solution
Current ratio is the ratio that measures Whether a firm has enough resources to meet its short term obligations.
Current ratio = Current assets ÷ Current liabilities
| Current assets | Amount | Current liabilities | Amount |
| Accounts receivable | 28000 | Accounts payable | 18300 |
| Cash | 7800 | Unearned service revenue | 2700 |
| Office supplies | 4800 | ||
| Prepaid insurance | 5080 | ||
| Total | 45680 | Total | 21000 |
Building is a fixed asset and long term notes payable is a long term liability.
| Current Ratio | ||||
| Choose numerator | / | Choose denominator | = | Current Ratio |
| Current assets | / | Current liabilities | = | Current Ratio |
| 45680 | / | 21000 | = | 2.175 |
Current Ratio = 2.175
2 PFA
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