A Company Has Current Assets of $250,000,current Liabilities of $180,000,cash

question 59

Multiple Choice

A company has current assets of $250,000,current liabilities of $180,000,cash of $70,000,and a mortgage at the bank for $150,000 cash.What is the company's current ratio?

• A) 0.47 3.57
• B) 1.39
• C) 1.67
• D) 3.57

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Definitions:

Financial Leverage

Taking on borrowed money to magnify the possible profits of an investment.

EBIT

Profitability metric that disregards interest and income tax expenses, known as earnings before interest and taxes.

Homemade Leverage

The use of personal borrowing to change the overall amount of financial leverage to which an individual or business is exposed.

Weighted Average Cost of Capital

Weighted Average Cost of Capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.