Abbott Manufacturing Company's current ratio is 2:1. The company has $50,000 in current liabilities; current assets must be $25,000.

Question

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If Abbott Manufacturing Company's current ratio is 2:1 and it has $50,000 in current liabilities, its current assets must be $100,000, not $25,000, because the current ratio is calculated as current assets divided by current liabilities.

Abbott Manufacturing Company's Current Ratio Is 2:1