In 2011,P Co Reported a Current Ratio of 1

question 17

Multiple Choice

In 2011,P Co reported a current ratio of 1.47 and in 2012,0.55.In examining their statement of financial position for 2012,they disclosed current assets of $4,362 million and current liabilities of $7,914 million.In 2011,they had no short-term borrowings but they disclosed $3,921 million in short-term borrowings for 2012.What would P Co's current ratio have been in 2012 if they had not borrowed those funds?

• A)0.37
• B)0.98
• C)1.09
• D)It cannot be computed without knowing the amount of current liabilities in 2011 so we can compute the average current liabilities in the denominator.

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Definitions:

Litres of Fuel

A measure of volume used to quantify fuel use, typically in vehicles or machinery.

Fixed Cost

Refers to expenses that do not change in total regardless of the level of production or sales activity, such as rent, salaries, and insurance costs.

Rent of Factory

The periodic payment made for the use of a factory facility or space for manufacturing or production processes.

Kitchen Manufacturer

A company or enterprise specializing in the production of kitchen units, appliances, and related items.