Problem

Analyzing the Impact of Selected Transactions on the Current RatioThe Sports Authority, In...

Analyzing the Impact of Selected Transactions on the Current Ratio

The Sports Authority, Inc., is the country’s largest private full-line sporting goods retailer. Stores are operated under four brand names: Sports Authority, Gart Sports, Oshman’s, and Sportmart. Assume one of the Sports Authority stores reported current assets of $88,000 and its current ratio was 1.75. Assume that the following transactions were completed: (1) paid $6,000 on accounts payable, (2) purchased a delivery truck for $10,000 cash, (3) wrote off a bad account receivable for $2,000, and (4) paid previously declared dividends in the amount of $25,000.

Required:

Compute the updated current ratio, rounded to two decimal places, after each transaction.

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