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At the end of Year 1, Swanson Corporation has $650,000 in current assets and $500,000 in current liabilities. During Year 2, the company realizes a $100,000 increase in each amount, such that at the end of Year 2, the company has $750,000 in current assets and $600,000 in current liabilities. Calculate the current ratio for Year 1 and for Year 2.

Respuesta :

Samawati

Answer:

year 1, 1.3  : year 2, 1. 25

Explanation:

The current ratio is a financial ratio used to gauge a company's ability to pay its current liability when they become due.

The formula for calculating currents assets

Current ratio = current assets/ current liabilities

For year 1,

Current assets : $650,000, current liabilities: $500,000

Current ratio = $650,000/$500,000

Current ratio =1.3

For year 2:

Current assets: $750,000 : current liabilities: $600,000

Current ratio = $750,000 / $600,000

Current ration =1.25

Parrain

Based on the current assets and liabilities, the current ratio in Years 1 and 2 are 1.3 and 1.25 respectively.

The current ratio is calculated by the formula:

= Current assets / Current liabilities

Current Ratio in Year 1:

= 650,000 / 500,000

= 1.3

Current ratio in Year 2:

= 750,000 / 600,000

= 1.25

In conclusion, the current ratio in year 1 was 1.3 and in year 2 it was 1.25.

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