Suppose these selected condensed data are taken from recent balance sheets of Bob Evans Farms (in thousands).
Question:
Suppose these selected condensed data are taken from recent balance sheets of Bob Evans Farms (in thousands).
Compute the current ratio for each year and comment on your results.
Cash Accounts receivable (net) Inventory Other current assets Total current assets Total current liabilities 2022 $ 13,606 23,045 31,087 12,522 $ 80,260 $245,805 2021 $ 7,669 19,951 31,345 11,909 $ 70,874 $326,203
Step by Step Answer:
The current ratio is calculated by dividing current assets by current liabilities For ...View the full answer
Accounting Principles
ISBN: 9781119707110
14th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Jill E. Mitchell
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
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