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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
- Don GLv 71 decade agoFavorite Answer
(a) You're correct
(b) Revised Current Assets 5816 / Revised Current Liab 3876 = 1.5