Posted: January 6th, 2017

Determine the current ratio for 2013 and 2014. Does the change in the current ratio from 2013 to 2014 indicate a favorable or unfavorable trend?

Question 5:

• Proficient:
  • Describe how the current ratio is used to analyze financial results?
  • What are the components of the ratio and how is the ratio calculated?
  • What does the ratio indicate regarding a company’s financial position?
• Distinguished:
  • Current assets and current liabilities for the Fortson Company are:
    • Current assets: 2013—$262,500; 2014—$310,500.
    • Current liabilities: 2013—$150,000; 2014—$172,500.
  • Determine the current ratio for 2013 and 2014. Does the change in the current ratio from 2013 to 2014 indicate a favorable or unfavorable trend?