Calculate the current ratio for Sal?s Taco Company at the end of 2016 and 2017, based on
Question:
Calculate the current ratio for Sal?s Taco Company at the end of 2016 and 2017, based on the following data:
What does the result suggest about the company over time? What can you say about the ratio for Sal?s Taco Company when compared to Chipotle?s 2017 ratio of 1.944?
Current Assets Current Liabilities End of 2016 End of 2017 $280,000 $155,000 $270,000 $250,000
Step by Step Answer:
Current Ratio Current Assets Current Liabilities 2016 28...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.
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