If Line Ltd Has a Current Ratio of 2

question 32

Multiple Choice

If Line Ltd has a current ratio of 2.5:1 and current assets are $600,000, how much are the company's current liabilities?

• A) $200,000
• B) $300,000
• C) $360,000
• D) $240,000

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Definitions:

Materials

The physical components used in the production of goods, including both raw inputs and manufactured parts.

Processing Department

A section of a manufacturing facility where a specific type of processing or assembly operation is performed on products.

Ending Inventory

Ending Inventory refers to the total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting the cost of goods sold.

Conversion Costs

The sum of labor and overhead costs incurred to convert raw materials into finished goods.