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Can you figure out what this current ratio is (Accounting question)?

In the following, question b is what I'm having trouble with. I get 1.02 but apparently that's wrong.

Lancer Boutique reported the following financial data for 2010 and 2009.

LANCER BOUTIQUE

Balance Sheet (partial)

September 30 (in thousands)

2010 2009

Current assets

Cash and short-term deposits $3,280 $1,558

Accounts receivable $2,379 $1,765

Inventories $1,611 $1,582

Other current assets $346 $209

Total current assets $7,616 $5,114

Current liabilities

$5,676 $3,920

(a) Calculate the current ratio for Lancer Boutique for 2010 and 2009. (Round all ratios to 2 decimal places, e.g. 2.25.)

2010 1.34 : 1

2009 1.30 : 1

(b) Suppose that at the end of 2010, the Lancer Boutique used $1.8 million cash to pay off $1.8 million of accounts payable. Compute the new current ratio.

1 Answer

Relevance
  • Don G
    Lv 7
    1 decade ago
    Favorite Answer

    (a) You're correct

    (b) Revised Current Assets 5816 / Revised Current Liab 3876 = 1.5

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