a. The current ratio (assets/liabilities) of company X is 3.2. Given that the current assets are $416,000, find the current liabilities: b. The board of directors determines that the current ratio must never be below 2.6. What is the maximum amount that the company can borrow?
Added by William A.
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We are given the current ratio and current assets. We can use the formula for the current ratio to find the current liabilities: Current Ratio = (Current Assets) / (Current Liabilities) Show more…
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The current ratio of any business organization is the ratio of its current assets to its current liabilities. Let's say you are acting as the Managing Director of ACE Equipment Co. and have decided to obtain a short-term loan to build up inventory. The company has current assets of N350,000 and current liabilities of N80,000. How much can the Managing Director borrow if the company's current ratio must be not less than 2.5? Note that funds received are considered current assets and loans are considered current liabilities.
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