Asked by Suzanna Mondragon on Jun 26, 2024
Verified
Dratif Corporation's working capital is $33,000 and its current liabilities are $80,000.The corporation's current ratio is closest to:
A) 1.41
B) 0.59
C) 3.42
D) 0.41
Working Capital
The difference between a company's current assets and current liabilities, indicating the liquidity available to fund daily operations and short-term financial obligations.
Current Liabilities
Financial obligations a company is expected to settle within one year or within its operating cycle, whichever is longer.
Current Ratio
A financial metric that measures a company's ability to pay off its short-term liabilities with short-term assets.
- Apprehend the process and relevance of working capital in demonstrating a corporation's short-term economic stability.
Verified Answer
= $80,000 + $33,000 = $113,000
Current ratio = Current assets ÷ Current liabilities
= $113,000 ÷ $80,000 = 1.4125
Learning Objectives
- Apprehend the process and relevance of working capital in demonstrating a corporation's short-term economic stability.
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