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Calculating current ratio and return on equity

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A company has the following accounts: cash ($25,000), net income ($50,000) interest income ($12,000), accounts payable ($75,000), factory ($85,000), equity ($305,000), inventory ($75,000), and accounts receivable ($6,000).

What is the current ratio for the company? Show your calculations.

What is the return on equity? Show your calculations.

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Solution Summary

The solution gives the formula for computation and then solves for an answer. The assumptions used in preparing the solution are listed in the response.

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Current ratio: = current assets / current liabilities
Current assets: 25,000 + 6,000 + 75,000 = 106,000
Current liab: 75,000
Ratio 106,000 / ...

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