The balance sheet of Burger King reports current assets of $30,500 and current liabilities of $15,800.

Calculate the current ratio of Burger King and detemine whether it will increase or decrease as a result of the following transactions:

-Paid $2,030 cash for a new oven.

•• I know to get the current ratio you divide current assets/current liability, but I do not understand how to factor in the $2,030 transaction. Any help will much appreciated. Thank you!

Any help?

To calculate the current ratio for Burger King, you need to divide the current assets by the current liabilities. In this case, the current assets are $30,500, and the current liabilities are $15,800.

Current Ratio = Current Assets / Current Liabilities = $30,500 / $15,800

= 1.94 (rounded to two decimal places)

Now, let's consider the effect of the transaction where Burger King paid $2,030 cash for a new oven on the current ratio.

When Burger King pays for the new oven with cash, it will decrease the cash balance but will increase the value of the oven on the asset side.

Since the oven is a fixed asset and not a current asset, it will not have a direct impact on the current ratio.

Therefore, the current ratio will remain the same after the transaction.

So, the current ratio for Burger King will remain 1.94 even after the purchase of the new oven.