Beta business has total current assets of $1,000,000 and total current liabilities of $400,000. if the company purchases $100,000 of inventory on account, its current ratio will

Given:
total current assets : 1,000,000
total current liabilities : 400,000
purchase 100,000 worth of inventory on account.

Current ratio = total current assets / total current liabilities

current ratio = 1,000,000 / 400,000 = 2.50

Current assets: 1,000,000 + 100,000(inventory) = 1,100,000
Current liabilities: 400,000 + 100,000(accounts payable) = 500,000

Current ratio = 1,100,000 / 500,000 = 2.20

From 2.50 current ratio, the company will have a current ratio of 2.20 after it purchases inventory on account. 

Current ratio tells us the ability of the company to pay off short term liabilities using the company's assets.