An organization's current liabilities are $40,000 and current assets are $120,000;therefore,the firm's current ratio is ____________.
A)4 to 1
B)3.1 to 1
C)8 to 1
D)3 to 1

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. Therefore, the current ratio in this case would be 120,000/40,000 = 3 to 1. The closest option is option D.

An Organization's Current Liabilities Are $40,000 and Current Assets Are