ABC has the following: cash, $102 million; receivables, $94 million; inventory, $182 million; other current assets, $18 million, Plant Property and Equipment $220 million, accounts payable, $98 million long-term debt, $23 million. Based on these amounts, what is the current ratio (round to 2 decimal points)?

Current ratio = 4.04      

Explanation:

Current ratio measures the ability of a business to settle its short term obligations using its liquid financial resources (current assets)

A current ratio in excess of 2 is considered as adequate (except for some special occasions) and vice versa.

Current ratio is computed as follows:

Current ratio = current assets/current liabilities

Applying this we have

                                                                                    $

Cash                                                                          102

Receivable                                                                 94

Inventory                                                                   182

Other current assets                                                 18

Total current assets                                                 396

Total current liability                                                 98

Current ratio=    Total current assets / Total current liability        

Current ratio = 396/98= 4.04:1                        

Current ratio = 4.04                

answer; risk transference;