A bakery has total current assets of $83,200 and total current liabilities of $60,150. What is its current ratio?

1. The current ratio divides total current assets by total current liabilities. 2. Total current assets are $83,200. 3. Total current liabilities are $60,150. 4. Divide: $83,200 divided by $60,150 equals 1.38. 5. Rounded to one decimal place, the current ratio is 1.4. 6. That value means little on its own: if the industry average for small bakeries were 2.4, this firm would look short of liquidity. 7. Answering 1.1 gives the acid-test ratio, which strips inventory out first, and answering 0.7 flips the fraction upside down. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.7 Analyzing Financial Statements_