Suppose these selected condensed data are taken from recent balance sheets of Bob Evans Farms (in thousands).
Question:
Compute the current ratio for each year and comment on your results.
2019 2020 $ 7,669 $ 13,606 Cash Accounts receivable 23,045 19,951 31,087 Inventory 31,345 11,909 Other current assets 12,522 $ 80,260 $ 70,874 Total current assets $245,805 $326,203 Total current liabilities
Step by Step Answer:
Current ratio The current ratio increased by 50 033 022 indic...View the full answer
Accounting Principles
ISBN: 978-1119411482
13th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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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