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Homework answers / question archive / For the FY 2018, Dorchester Company's balance sheet included the following current items: cash $27,000, accounts receivable $121,000, inventories $115,000, prepaid expenses $21,000, accounts payable $62,000, and accrued expenses $59,000
For the FY 2018, Dorchester Company's balance sheet included the following current items: cash $27,000, accounts receivable $121,000, inventories $115,000, prepaid expenses $21,000, accounts payable $62,000, and accrued expenses $59,000. Use this information to determine the Current Ratio. (Round & enter your answers to one decimal place.)
Computation of Current Ratio:
Current Ratio = Current Assets / Current Liabilities
Here,
Current Assets = Cash + Accounts Receivables + Inventories + Prepaid Expenses = $27,000+$121,000+$115,000+$21,000 = $284,000
Current Liabilities = Accounts Payable + Accrued Expenses = $62,000+$59,000 = $121,000
Current Ratio = $284,000 / $121,000 = 2.35
