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What is the current ratio? Use the attached financial data to calculate the ratios for 2021. Round to the nearest decimal.

Financial Data for American Eagle Outfitters (AEO):

\begin{tabular}{|c|c|c|}
\hline
& \textbf{2021} & \textbf{2020} \\
\hline
Revenues & \[tex]$5.011 & \$[/tex]3.759 \\
\hline
Cost of Sales & \[tex]$3.019 & \$[/tex]2.611 \\
\hline
Total Operating Expenses & \[tex]$1.222 & \$[/tex]977.3 \\
\hline
Interest Expense & \[tex]$34.6 & \$[/tex]24.6 \\
\hline
Income Tax Expense & & \[tex]$830 \\
\hline
Cash + Equivalents & \$[/tex]434.8 & \[tex]$850.5 \\
\hline
Accounts Receivable (A/R) & \$[/tex]286.7 & \[tex]$146.1 \\
\hline
Inventories & \$[/tex]553.5 & \[tex]$405.4 \\
\hline
Prepaid Expenses & \$[/tex]122 & \[tex]$121 \\
\hline
Total Current Assets & \$[/tex]1,397 & \[tex]$1,523 \\
\hline
Total Assets & \$[/tex]3,787 & \[tex]$3,435 \\
\hline
Accounts Payable (A/P) & \$[/tex]231.8 & \[tex]$255.9 \\
\hline
Total Current Liabilities & \$[/tex]842.9 & \[tex]$358.5 \\
\hline
Long-term Debt & \$[/tex]341.0 & \[tex]$325.3 \\
\hline
\end{tabular}

Select one:
A. $[/tex]165.7 \%$



Answer :

GinnyAnswer
To determine the current ratio for American Eagle Outfitters (AEO) in 2021, we can use the provided financial data. The current ratio is calculated as follows:

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

Using the financial data provided:

- Total Current Assets for 2021: \[tex]$1397 million - Total Current Liabilities for 2021: \$[/tex]842.9 million

Now, plug these values into the formula:

[tex]\[ \text{Current Ratio} = \frac{1397}{842.9} \][/tex]

To find the current ratio rounded to the nearest decimal:

[tex]\[ \text{Current Ratio} \approx 1.7 \][/tex]

Therefore, the current ratio for American Eagle Outfitters in 2021 is 1.7.

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