The following information pertains to Ortiz Company. Assume that all balance she
ID: 2458670 • Letter: T
Question
The following information pertains to Ortiz Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.
Assets
Cash and short-term investments $ 45,000
Accounts receivable (net) 30,000
Inventory 20,000
Property, plant and equipment 210,000
Total Assets $305,000
Liabilities and Stockholders’ Equity
Current liabilities $ 50,000
Long-term liabilities 95,000
Stockholders’ equity—common 160,000
Total Liabilities and Stockholders’ Equity $305,000
Income Statement
Sales $ 120,000
Cost of goods sold 66,000
Gross profit 54,000
Operating expenses 30,000
Net income $ 24,000
Number of shares of common stock 6,000
Market price of common stock $20
Dividends per share .50
What is the current ratio for Ortiz?
Answer
1.90
1.50
1.30
.53
A)1.90
B)1.50
C)1.30
D).53
Explanation / Answer
Answer A: 1.90
Current ratio = Current assets/ Current liability
Current assets: Total Assets - Propert plant and equipment
305,000 - 210,000 = 95,000 /-
Current liability : 50,000
95,000 / 50,000 = 1.90
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