After a fire destroyed the accounting records and most of the offices of Park Company, the owner decided to ask the bank for a short- term loan to supplement the insurance settlement. The owner remembers the following information and asks you to determine the current ratio so that she may use that information in her loan application:
Current assets ....... $ 40,000
Long-term liabilities ...... 60,000
Net income ........ 32,000
Return on assets ......... 8%
Ratio of debt-to-equity ..... 0.25