The following information pertains to Tanzi Company. Assume that all balance she

Question

The following information pertains to Tanzi Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.

$393,328

What is the current ratio for this company?

Select the correct answer.

Assets Cash and short-term investments $36,666 Accounts receivable (net) $31,813 Inventory $29,912 Property, plant and equipment $294,937       Total Assets

$393,328

Liabilities and Stockholders' Equity   Current liabilities $57,852   Long-term liabilities $98,645   Stockholders' equity-common $236,831       Total Liabilities and stockholders' equity $393,328 Income Statement   Sales $80,267   Cost of goods sold $36,120   Gross margin $44,147   Operating expenses $24,810       Net income $19,337   Number of shares of common stock $5,713   Market price of common stock $29

Explanation / Answer

Current Ratio = Current Assets / Current Liabilities

= (Cash & Short term investment + Accounts receivable + Inventory) / Current Liabilities

= (36666 + 31813 + 29912) / 57852

= 98391/57852

= 1.70 (Option-a)

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