Multiple Choice Problem (1 Viewer)

[Chic07]

A multiple choice i came across in a paper gives the following information:

Current Assets:
Cash 3 000
Accounts Receivables 17 000
Inventory 11 000

Current Liabilities:
Bank Overdraft 1 000
Accounts Payables 11 000

Question: What is the current ratio?
(a) 1.4:1
(b) 2:1
(c) 1:1
(d) 0.4:1

The answer is (a), but i dont understand why. can somebody please explain?

Thanks

 

[orange_blob]

I think there might be something wrong here.

the current ratio = CA / CL
=31000/12000
=2.58 : 1

So IMO either the question or the answer is wrong.

Where did you get the question?

 

[Chic07]

yeh thats what i got
its from Nelson Business Studies: HSC Course

from another financial question, what does it mean when it says: "the australian dollar appreciates AGAINST the US dollar"

 

[orange_blob]

For the AU$ to appreciated agaignst the US$ it means that AU$1 is now worth more US$ than it was previously.

Eg. if AU$1 is worth US$0.60 then it rises to US$0.70, then the AU Dollar has appreciated against the US Dollar.

 

[Chic07]

Thanks

 

[orange_blob]

no worries

 

[wrxsti]

2.58:1 , u were correct orange_blob