he balance sheet of Mister Ribs Restaurant reports current assets of $50,000 and current liabilities of $20,000. Required: (a) Calculate the current ratio. (Round your answer to 1 decimal place.) Current ratio (b) Does it appear likely that Mister Ribs will be able to pay its current liabilities as they come due in the next year? Yes Explanation: (a) Current Ratio = Current Assets Current Liabilities Current Ratio = $50,000 = 2.5 $20,000 (b) Yes, it is likely that Mister Ribs will be able to pay its current liabilities as they come due. The current ratio of 2.5 indicates that for every dollar in current liabilities, the company has 2.5 dollars in current assets. This ratio indicates a good ability to pay.

he balance sheet of Mister Ribs Restaurant reports current assets of $50,000 and current liabilities of $20,000.  

Required:

(a)	Calculate the current ratio. (Round your answer to 1 decimal place.)

 

Current ratio

 

(b)	Does it appear likely that Mister Ribs will be able to pay its current liabilities as they come due in the next year?

Yes

Explanation:

(a)

Current Ratio	=	Current Assets
		Current Liabilities

 

Current Ratio	=	$50,000		=	2.5
		$20,000

(b)

Yes, it is likely that Mister Ribs will be able to pay its current liabilities as they come due.  The current ratio of 2.5 indicates that for every dollar in current liabilities, the company has 2.5 dollars in current assets. This ratio indicates a good ability to pay.