Condensed financial data are presented below for the Phoenix Corporation: 20X2 20X1 Accounts receivable $ 267,500...

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Condensed financial data are presented below for the Phoenix Corporation: 20X2 20X1 Accounts receivable $ 267,500...

Condensed financial data are presented below for the Phoenix Corporation:

	20X2			20X1
Accounts receivable	$	267,500		$	230,000
Inventory		312,500			257,500
Total current assets		670,000			565,000
Intangible assets		50,000			60,000
Total assets		825,000			695,000
Current liabilities		252,500			200,000
Long-term liabilities		77,500			75,000
Sales		1,640,000
Cost of goods sold		982,500
Interest expense		10,000
Income tax expense		77,500
Net income		127,500
Cash flow from operations		71,000
Cash flow from investing activities		(6,000	)
Cash flow from financing activities		(62,500	)
Tax rate		30	%

The current ratio for 20X2 is (rounded):

Multiple Choice

3.4 to 1
1.4 to 1
2.0 to 1
2.7 to 1

business accounting

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Answer 1

Answer #1

Current ratio=Current assets/Current liabilities

=670,000/252500

which is equal to

=2.7 to 1(Approx)

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Answer 2

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