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Readme
2 months ago
10

At the end of Year 1, Swanson Corporation has $650,000 in current assets and $500,000 in current liabilities. During Year 2, the

company realizes a $100,000 increase in each amount, such that at the end of Year 2, the company has $750,000 in current assets and $600,000 in current liabilities. Calculate the current ratio for Year 1 and for Year 2.
Business
1 answer:
Mariulka [3.8K]2 months ago
6 0

Answer:

year 1, 1.3: year 2, 1.25

Explanation:

The current ratio serves as a metric to assess how well a company can meet its short-term obligations as they come due.

The formula for determining current assets

Current ratio = current assets / current liabilities

For year 1,

Current assets: $650,000, current liabilities: $500,000

Current ratio = $650,000 / $500,000

Current ratio = 1.3

For year 2:

Current assets: $750,000; current liabilities: $600,000

Current ratio = $750,000 / $600,000

Current ratio = 1.25

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