BACHELOR OF BUSINESS ADMINISTRATION

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BUSINESS ADMINISTRATION

FINANCIAL MANAGEMENT

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Siskiyou, Inc. has total current assets of $1, 200, 000; total current liabilities of $500, 000; and long-term assets of $800, 000. How much is the firm’s Total Liabilities & Equity?
A
$2, 500, 000
B
$1, 300, 000
C
$2, 000, 000
D
$1, 800, 000
Explanation: 

Detailed explanation-1: -Current Ratio-A firm’s total current assets are divided by its total current liabilities. It shows the ability of a firm to meets its current liabilities with current assets. Quick Ratio-A firm’s cash or near cash current assets divided by its total current liabilities.

Detailed explanation-2: -Now let us increase the current assets and current liabilities by Rs. 100000 and calculate the new current ratio; Current ratio = 300000/200000 = 1.5:1.

Detailed explanation-3: -The calculation for the current liabilities formula is relatively simple. It is a summation of all the current liabilities of the company. The current liabilities are notes payable, accounts payable, accrued expenses, unearned revenue, current portion of long-term debt, and other short-term debt.

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