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Chen Group has been operating for several years, and on December 31, 2020, presented the following statement

Question:

Chen Group has been operating for several years, and on December 31, 2020, presented the following statement of financial position (amounts in thousands).

Chen Group Statement of Financial Position December 31, 2020 Plant assets (net) Inventory ¥220,000 ¥220,000 Owner's ca

The mortgage payable is due in 2023.


Instructions
Compute the current ratio and the working capital.

Transcribed Image Text:

Chen Group Statement of Financial Position December 31, 2020 Plant assets (net) Inventory ¥220,000 ¥220,000 Owner's capital Mortgage payable Accounts payable 95,000 140,000 Receivables 70,000 75,000 Cash 40,000 ¥430,000 ¥430,000

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Current ratio 95000 ...View the full answer


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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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