SDJ, Inc., has net working capital of $3,640, current liabilities of $5,430, and inventory of $4,290. What is the current ratio?

The current ratio is a measure of a company’s ability to meet its short-term financial obligations. It is calculated by dividing the net working capital (NWC) by the total current liabilities. The higher the ratio, the better it is for the company as it shows that they have sufficient cash and liquid assets to cover all of their current liabilities. In the case of SDJ, Inc., their NWC is 3,640 and their current liabilities are 5,430 which gives them a current ratio of 0.67.

In general, having a low current ratio can be an indicator that there may be financial problems ahead as it suggests that the company has very little in terms of liquid assets to pay off its short-term debts. A low or declining current ratio could be cause for concern among shareholders and creditors alike who will want assurance that SDJ has enough resources to make payments on time without having to borrow money or rely on outside help.

It’s important to note though that not all companies have equal liquidity needs; some industries tend have higher levels of buying power than others so what may constitute as ‘low’ for one business might actually be fairly normal for another industry – thus making direct comparisons between different companies difficult. Additionally, seasonal businesses or those with large inventories will typically need larger amounts of working capital in order maintain operations during slow times when sales are down.

Finally, while measuring liquidity ratios such as NWC/current liability can give us a good idea about how much cash or liquid assets SDJ has access to at any given time – other factors such as inventory management should also be taken into account when evaluating overall performance and health status of any organization. By taking both into consideration we can get an accurate picture about how well a business is doing financially and make more informed decisions regarding investing opportunities or lending agreements going forward