At the end of a recent year, The Gap, Inc., reported total assets of $7,610 million, current
Question:
At the end of a recent year, The Gap, Inc., reported total assets of $7,610 million, current assets of $4,315 million, total liabilities of $4,706 million, current liabilities of $2,453 million, and stockholders’ equity of $2,904 million. What is its current ratio and what does this suggest about the company?
a. The ratio of 1.62 suggests that The Gap has liquidity problems.
b. The ratio of 1.76 suggests that The Gap has sufficient liquidity.
c. The ratio of 1.62 suggests that The Gap has greater current assets than current liabilities.
d. The ratio of 1.76 suggests that The Gap is not able to pay its short-term obligations with current assets.
Step by Step Answer:
b The ratio o...View the full answer
Financial Accounting
ISBN: 978-1259964947
10th edition
Authors: Robert Libby, Patricia Libby, Frank Hodge
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.
Students also viewed these Business questions
-
Art World Industries, Inc., was incorporated in 1986 in Delaware, although it is located in Los Angeles. The company prints, publishes, and sells limited-edition graphics and reproductive prints in...
-
Multiple Choice Questions 1. If a publicly traded company is trying to maximize its perceived value to decision makers external to the corporation, the company is most likely to understate which of...
-
The data below are adapted from the financial statements of Long Boat Ltd. at the end of a recent year (in thousands). Requirements 1. Prepare Long Boat's statement of cash flows for the year. Follow...
-
Explain why b x = e x ln b .
-
For the exercises in this lesson, you may find it helpful to use a window on your calculator that has friendly x-values. A background grid may also be helpful. 1. Identify each quadratic function as...
-
You conduct a well-designed study involving a random sample (n = 84). Age is measured in years. Your analysis shows that in this sample, age is normally distributed and representative of the...
-
Can you create a graphic of the Fairmont payroll systems company expenses that highlight general accounting clerk, Mary Perez, has company expenses for FICA (social security), Medicare and 401K,...
-
A four-year financial project has estimates of net cash flows shown in the following table: It will cost $65,000 to implement the project, all of which must be invested at the beginning of the...
-
Listed below are eight firms that are currently operating in the market. The market share of each firm is listed in the table below. Firm Market Share Bird 16 Cat 11 Dog 8 Horse 4 Pig 5 Cow 10 Tiger...
-
The position of a particle as a function of time is given by r(vector) = (5.0i + 4.0j)t 2 m, where t is in seconds. a. What is the particles distance from the origin at t = 0, 2, and 5 s? b. Find an...
-
In March 2008, the Securities and Exchange Commission (SEC) sued Canadian pharmaceutical company Biovail Corporation and some of its former officers for accounting fraud. The SEC alleged that present...
-
Which of the following is not a financing activity on the statement of cash flows? a. When the company lends money. b. When the company borrows money. c. When the company pays dividends. d. When the...
-
Use the table in the Review Exercises Select a cluster sample of 12 people, and find the mean of their blood pressures. Compare this with the population mean. Data from in Review Exercise Table 2005...
-
Describe "Place", as it relates to the third "P" of social marketing. Thinking of the past COVID-19 vaccination efforts in Canada, recommend at least two ways to save the priority audience some time,...
-
Identify various ways to determine portfolio risk and return and provide relevant examples of each.
-
A certificate of limited partnership need not include: Name and address of limited partnership Name and address of each limited partner Name and address of each general partner Sworn statement...
-
Describe an instance where your communication skills allowed you to make a meaningful difference to a situation. What was the situation and how did you go about it? Who were involved?
-
Required: a. Consider the theoretical cost of Debt, Preference Shares and Ordinary Shares rank them from most expensive to cheapest.
-
Asian Windows manufactures a hand-painted bamboo window shade for standard-size windows. Production and sales data for 2012 are as follows: Variable manufacturing costs...
-
Open Text Corporation provides a suite of business information software products. Exhibit 10-9 contains Note 10 from the companys 2013 annual report detailing long-term debt. Required: a. Open Text...
-
The Securities and Exchange Commission (SEC) regulates companies that issue stock on the stock market. It receives financial reports from public companies electronically under a system called EDGAR...
-
Frances Sabatier asked a local bank for a $50,000 loan to expand her small company. The bank asked Frances to submit a financial statement of the business to supplement the loan application. Frances...
-
Recent balance sheets are provided for Twitter, Inc., a global platform for real-time public self-expression and conversation. Required: 1. Is Twitter a corporation, sole proprietorship, or...
-
"Beginning Transactions" on the first Excel worksheet will provide the Balance Sheet for 2019 and the Transactions for January 2020. On the second Excel worksheet, "Journal Entries" , you should...
-
Discuss feminist ideology a) What is feminism as an ideology? How do feminists explain and understand the root cause of gender inequality and what do they propose to do? Include a discussion of...
-
You invest $ 1 , 1 0 0 at a 1 2 % annual interest rate, stated as an APR. Interest is compounded monthly. How much will you have in 1 . 5 years? In 2 years? ( Do not round intermediate calculations....
Study smarter with the SolutionInn App