Which of the following is considered a strong current ratio
A)0)4
B)0)8
C)-1.0
D)2)0

Question

Quizplus · Accepted Answer

A current ratio is calculated by dividing current assets by current liabilities. A strong current ratio indicates that a company has enough current assets to pay off its current liabilities. A ratio of 2.0 means that a company has twice as many current assets as current liabilities, which is considered a strong current ratio. Options A and C have ratios less than 1, which means that the company may struggle to pay off its current liabilities. Option B has a ratio of 0.8 which is not a strong ratio. Therefore, option D with a ratio of 2.0 is the best choice for a strong current ratio.

Which of the Following Is Considered a Strong Current Ratio