Q6SE
Question
Evaluating current ratio
Requirements
1. Compute Accel’s Companies’ current ratio at May 31, 2018 and 2017.
2. Did Accel’s Companies’ current ratio improve, deteriorate, or hold steady during 2018?
Step-by-Step Solution
Verified Answer
Answer
Decreasing Current ratio Over a year
1Step 1: Calculations
Requirement 1
| Current Assets | / | Current Liabilities | = | Current Ratio | |
| 2018 | 52,800 | / | 28,000 | = | 1.89 |
| 2017 | 25,200 | / | 13,200 | = | 1.91 |
2Step 2: Explanations
Requirement 2
The current ratio is decreasing so it means the Company’s current ratio is deteriorated during 2018.
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