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21 May, 07:09

Bramble Corp. has current assets of $1490000 and current liabilities of $820000. If they issue $175000 of new stock what will their new current ratio be?

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  1. 21 May, 07:23
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    New Current ratio will be 1.82

    Explanation:

    Current assets = $1,490,000

    Current liabilities = $820,000

    New stock issued = $175000

    Current Ratio = Current Assets / Current Liabilities

    Current Ratio = $1,490,000 / $820,000

    Current Ratio = 1.8171 = 1.82

    New Stock issue will not effect the current ratio as current ratio only deals the current assets and current liabilities (as given in formula above). Any equity transaction will not effect this ratio.
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