Assume a Company Has a Current Ratio of 1

question 10

Multiple Choice

Assume a company has a current ratio of 1.8 and working capital equal to $48,000. If the company's current liabilities are equal to $60,000, its total current assets are:

• A)$ 10,800.
• B)$ 54,000.
• C)$ 6,000.
• D)$108,000.

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Definitions:

Property, Plant, and Equipment

Long-term assets vital to business operations and not easily converted into cash, encompassing real estate, factories, machinery, and more.

Buildings

Assets classified in accounting as long-term or fixed assets, representing structures owned by a company for business use.

Return On Assets

A profitability ratio that measures how efficiently a company uses its assets to generate profit, calculated as net income divided by total assets.

Asset Turnover

A ratio that measures the efficiency of a company's use of its assets in generating sales revenue.