Question

In: Finance

Upriver Tours has balance sheet values of: Inventory $70,500; accounts receivable $50,700; accounts payable $58,900; cash...

Upriver Tours has balance sheet values of: Inventory $70,500; accounts receivable $50,700; accounts payable $58,900; cash $32,300, notes payable $20,000, long-term debt $134,700, and net fixed assets $504,500. What is the current ratio? Do you believe the company can meet its short-term obligations?

Group of answer choices

1.95, yes

0.95, no

2.11, yes

1.98, no

0.98, yes

Solutions

Expert Solution

Current ratio is calculated using the below formula:

Current Ratio= Current Assets/Current Liabilities

                          = Inventory + Accounts receivable + Cash/ Accounts payable + Notes payable

                          = $70,500 + $50,700 + $32,300/ $58,900 + $20,000

                          = $153,500/ $78,900

                          = 1.9455   1.95

Yes, the company can meet its short-term obligations since it has its sufficient current assets to pay off its current liability.

In case of any query, kindly comment on the solution.

jeff jeffy answered 1 month ago
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