What is the current ratio?
A) 1.2 to 1.
B) Less than 2 to 1, but not 1.2 to 1.
C) 2.6 to 1.
D) More than 2 to 1, but not 2.6 to 1.

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. A ratio of 2:1 or higher is considered good, indicating that the company is able to cover its short-term obligations. Option C indicates a current ratio of 2.6 to 1, which is higher than 2:1 and therefore the best choice. Options A and B indicate a current ratio lower than 2:1, and option D indicates a current ratio higher than 2.6 to 1, all of which are not the best choice based on the definition of a good current ratio.

What Is the Current Ratio