23. The schedule of changes in working capital is prepared with the help of
(1) current assets
(2) current liabilities
(3) current assets and current liabilities
(4) non-current assets and non-current liabilities
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Current Ratio Formula
The Current Ratio formula is:
Current Ratio = Current Assets / Current Liabilities
Example of the Current Ratio Formula
If a business holds:
Cash = $15 million
Marketable securities = $20 million
Inventory = $25 million
Short-term debt = $15 million
Accounts payables = $15 million
Current assets = 15 + 20 + 25 = 60 million
Current liabilities = 15 + 15 = 30 million
Current ratio = 60 million / 30 million = 2.0x
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