Janice Janitorial Supplies has cash of $28,000; net accounts receivable of $33,500; short-term investments of $6,000 and inventory of $20,000. It also has $22,500 in current liabilities and $37,500 in long-term liabilities. The current ratio for Janice Janitorial Supplies is:
To find the current ratio, you need to divide current assets by current liabilities.
Current assets include cash, net accounts receivable, short-term investments, and inventory.
Current liabilities include only the amount of liabilities due within one year, so long-term liabilities are excluded from this calculation.
Given the information provided:
Current assets = Cash + Net accounts receivable + Short-term investments + Inventory
Current assets = $28,000 + $33,500 + $6,000 + $20,000
Current assets = $87,500
Current liabilities = $22,500
Now, we can calculate the current ratio:
Current ratio = Current assets / Current liabilities
Current ratio = $87,500 / $22,500
Current ratio = 3.89
Therefore, the current ratio for Janice Janitorial Supplies is approximately 3.89.
To find the current ratio, we need to use the formula:
Current Ratio = Current Assets / Current Liabilities
First, let's calculate the current assets by adding the cash, net accounts receivable, short-term investments, and inventory:
Current Assets = Cash + Net Accounts Receivable + Short-Term Investments + Inventory
Current Assets = $28,000 + $33,500 + $6,000 + $20,000
Current Assets = $87,500
Now that we have the current assets, we can calculate the current ratio:
Current Ratio = Current Assets / Current Liabilities
Current Ratio = $87,500 / $22,500
Current Ratio = 3.89
Therefore, the current ratio for Janice Janitorial Supplies is approximately 3.89.