https://file.aiquickdraw.com/mathbot/file/1726665678289rdzywtyx.jpg

The question in the image asks you to calculate the current ratio for Adel Technologies in 2022 using their financial data. The current ratio is a financial metric used to assess a company's ability to meet its short-term obligations. It is calculated as:

\[
\text{Current Ratio} = \frac{\text{Total Current Assets}}{\text{Total Current Liabilities}}
\]

From the image, here is the data for 2022:

- **Current Assets**:
  - Cash and cash equivalents: $450,000
  - Receivables: $360,000
  - Stocks: $580,000
  - Other current assets: $200,000
  
- **Current Liabilities**:
  - Trade payables: $700,000
  - Other current liabilities: $200,000

### Calculation:

\[
\text{Total Current Assets} = 450,000 + 360,000 + 580,000 + 200,000
\]
\[
\text{Total Current Liabilities} = 700,000 + 200,000
\]

Now, I will calculate the current ratio.The total current assets for 2022 amount to **$1,590,000**, while the total current liabilities are **$900,000**. This gives a current ratio of approximately **1.77**.

A current ratio above 1 indicates that Adel Technologies has more current assets than liabilities, meaning it is likely able to meet its short-term obligations.

Would you like further details on this calculation or have any other questions?

Here are five related questions:
1. How does the current ratio compare to previous years?
2. What does a current ratio of 1.77 indicate in terms of financial health?
3. Can the current ratio be too high? What could that signify?
4. How is the current ratio affected by inventory or receivables turnover?
5. What other liquidity ratios could complement the analysis of this company?

**Tip:** A current ratio above 1 shows short-term financial health, but it's important to assess how liquid the assets are. Stocks and receivables may not convert to cash quickly.

James Lenny & Associates is a well-established audit firm. As the audit assistant, your client Adel Technologies is interested in its current ratio for 2022. Based on the financial data provided, what is the current ratio for 2022, and is the company solvent or facing financial concern?

Calculate the current ratio for Adel Technologies in 2022 using financial data. Learn how this key liquidity ratio measures a company's ability to meet short-term obligations. The problem covers financial concepts such as cash equivalents, receivables, and trade payables, suitable for finance or accounting students.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation