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Suppose these selected condensed data are taken from recent balance sheets of Bob Evans Farms (in thousands).

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Suppose these selected condensed data are taken from recent balance sheets of Bob Evans Farms (in thousands).

Compute the current ratio for each year and comment on your results.

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Cash Accounts receivable (net) Inventory Other current assets Total current assets Total current liabilities 2022 $ 13,606 23,045 31,087 12,522 $ 80,260 $245,805 2021 $ 7,669 19,951 31,345 11,909 $ 70,874 $326,203

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The current ratio is calculated by dividing current assets by current liabilities For ...View the full answer


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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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