Question: Can you explain the correct approach to solve this general accounting question? A company has current assets of $97,000 (of which $37,000 is inventory and

Can you explain the correct approach to solve this general accounting question?

A company has current assets of $97,000 (of which $37,000 is inventory and prepaid items) and current liabilities of $37,000. a. What is the current ratio? b. What is the acid-test ratio? c. If the company borrows $17,000 cash from a bank on a 120-day loan, what will its current ratio be? d. What will the acid-test ratio be

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