A current ratio above 2.00 would indicate that a:
A) company has $2 of current liabilities for every $1 of current assets.
B) company has $2 of total assets for every $1 of current liabilities.
C) company has $2 of current assets for every $1 of current liabilities.
D) company has $2 of total assets for every dollar of current assets.

Question

Quizplus · Accepted Answer

A current ratio is calculated by dividing current assets by current liabilities. Therefore, a current ratio above 2.00 would mean that the company has $2 of current assets for every $1 of current liabilities.

A Current Ratio Above 2