Questions: Select the labels then enter the amounts and compute the current ratio. (Round your answer to two decimal places.)

Solution Steps

To compute the current ratio, you need to divide the current assets by the current liabilities. The current ratio is a measure of a company's ability to pay short-term obligations.

The current ratio is defined as the ratio of current assets to current liabilities, expressed mathematically as: \[ \text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} \]

Given:

• Current Assets = \( 50000 \)
• Current Liabilities = \( 25000 \)

Substituting these values into the formula: \[ \text{Current Ratio} = \frac{50000}{25000} \]

Perform the division: \[ \text{Current Ratio} = 2.0 \]

Final Answer